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THE CONDITION 


OF THE 

LIFE INSURANCE COMPANIES 


OF THE 

STATE OF NEW YORK. 

% 

m 

REVISED TABULATED EDITION 


OF THE 



OF THE 


INVESTIGATION BY THE ASSEMBLY COMMITTEE. 

TOGETHER WITH 


Correspondence, Summary and other Matters of 
Interest in connection with Life Insurance. 



ALBANY, N. Y. 

W. S. MANNJNG, Publisher. 





A HG- 
612 


Entered according to Act of Congress, in the year 1877, by W. S. Manning, in 
the Office of the Librarian of Congress, at Washington. 



5 









PEEFACE. 


The testimony printed by the Committee contained so many errors 
and omissions, as to render it wholly unreliable and inadmissible as 
evidence. The official stenographer was not permitted to examine the 
proof of the document printed by the Committee, hence cannot be 
held responsible for the many and manifest errors therein contained, 
amounting, in many instances, to distortion, if not wilful misrepre¬ 
sentation of facts. This, taken together with the extreme interest 
that some of the members of the Committee exhibited in shielding 
several of the witnesses, often sustaining them in their refusal to 
answer certain questions asked by the counsel of the Committee, 
and, finally, closing the investigation, when half completed, has 
created, in the minds of those familiar with the proceedings, suspi¬ 
cion as to their motives, as well as grave doubts that they honestly 
performed the duty imposed upon them by the Assembly. 

The publisher employed the official stenographer to correct the 
errors, and to give him a true and correct copy of the evidence, 
which was carefully done, after much labor on his part, and 
expense on the part of the publisher. Appended will be found the 
certificate of the official stenographer, who has thoroughly examined 
this edition. 

The corrections, owing to a misunderstanding with printer, were 
made in italics in parenthesis to page 163 ; after that the parenthesis 
is omitted, 





Office of Harry Edwards, 

Stenographer, 

Albany, N. Y., May 21^, 1877. 

I, Harry Edwards, of the city and county of Albany, do hereby 
certify, that at the request of Mr. W. S. Manning, I revised and 
corrected the minutes of evidence taken by me as the official steno¬ 
grapher of the Assembly Committee on Insurance, in an investiga¬ 
tion held by said Committee into the various life insurance com¬ 
panies of this State; said W. S. Manning having informed me that 
lie required a corrected copy for publication. 

I further certify, that I have only corrected one copy for said W . 
S. Manning, retaining in my possession said original notes for no 
other purpose than to produce the same in courts of justice, as 
evidence under subpoena, if required, and that said W. S. Manning 
has the only complete revised and corrected copy of said evidence. 

(Signed) HARRY EDWARDS, 

[seal]. Official Stenographer. 

Signed and delivered in presence of 

(Signed) Richard P, Dumary. 


Bergen County, ) 

State of New Jersey, \ 

Henry D- W inton, of the town of Hackensack, of the 
county and state aforesaid, being duly sworn, deposes and says, that 
lie printed the work known as the “ Revised Tabulated Edition 
of the Official Stenographer’s Notes of the Investigation by' 
the Assembly Committee;” that the same is printed from a correct 
copy of the testimony from the stenographer, and that this work is 
correct, to the best of deponent’s knowledge and belief. 

H. D. WINTON. 

Subscribed and sworn to this 5tli day of ) 

%i f 

December, 1877, before me, at Hack- V 
ensack. ) 

Abraham D. Campbell, Notary Public of N. J. 



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TES TIM ONY. 


Mr. J. G Gka ham, from the Committee on Insurance, makes the 
following preliminary report of testimony taken, under resolutions 
of investigation referred to them : 

In the Matter of the Investigation into Life Insurance 

Companies. 

Tuesday, March 20, 1877. 

The committee met at its room on Tuesday morning, at nine 
o’clock. 

Present—Hon. J. G. Graham, Chairman, and Messrs. Cowdin, 
Ilusted, Lang, Skinner, Moody, Weiant and Floyd-Jones; Hon. N. 
C. Moak, of counsel for the People; Hon. Matthew Hale, of coun¬ 
sel for the Equitable Life Insurance Company; Judge Davies, of 
counsel for the Mutual Life Insurance Company. 

The Chairman —We will proceed with our inquiries this morning, 
and, as Judge Davies was here first, we will proceed with the ex¬ 
amination in reference to the Mutual Life Insurance Company. 

Judge Davies —I have a letter here which, with the permission of 
the committee, I will read, and then you can proceed to the exam¬ 
ination of Mr. W. H. C. Bartlett, the actuary of the company, who 
has a statement, which he has reduced to writing, containing all 
the information, I think, the committee desires. The letter is as 
follows: 


Mutual Life Ins. Co. of New York, 

140 to 146 Broadway, 

New York, March 17, 1877. 

To the Hon. J. G. Graham, Chairman of the Assembly Committee 
on Insurance , Albany , N. Y.\ 

Sir —Subpoenas to attend in Albany, at nine o’clock on Tuesday 
morning, March twentieth, have been served upon the vice-president 
of this company, acting as president, the second vice-president, the 
actuary and the secretary. 

The president being in California, a literal compliance with the 
terms of such subpoenas would strip the company of official direc¬ 
tion, and render the transaction of ordinary business impossible. 
It is respectfully assumed that the insurance committee did not 
contemplate so grave °n injury to the company’s interests, but that 
a substantial compliance with the mandate of the subpoena will be 
accepted. 

Under any other circumstances than those about to be detailed, 
the vice-president, as acting chief officer of the company, would 
personally present himself before the committee, and furnish the 



2 


information sought; and lie expressly disavows intentional disrespect 
in failure to attend at the time stated, for the following reasons : 
On Wednesday, March twenty-one, occurs a meeting of the board 
of trustees, pursuant to its by-iaws, preceded on the same day by a 
meeting of its finance committee, at both of which meetings the 
presence of the vice-president is absolutely essential to the interests 
of the company. And the time and attention of the vice-president 
will be necessarily, and almost exclusively, consumed on Tuesday, 
the day before such meetings, in preparation and arrangement of 
important business to be brought before the meetings, and therein 
acted on. 

The absence of the president is due to a bronchial affection from 
which he suffers at this season, and which has necessitated his visit 
to a milder climate during the soring months, annually, for several 
years past. He left on the twenty-second of February. 

The second vice president, Mr. Granniss, has been connected with 
this company only since January last. 

The vice-president, therefore, craves to be excused for non-attend¬ 
ance before the honorable insurance committee, for the reasons 
stated, and proffers the attendance of the actuary of the company, 
Professor William H. C. Bartlett, LL.D., and of the secretary, Mr. 
Isaac F. Lloyd, who will then present themselves before the commit¬ 
tee on the day and hour named, furnished with the information the 
committee desire, and prepared to answer on oath as to the truth of 
the same. 

The Hon. Henry E. Davies, of the company’s counsel, having 
occasion to be in Albany at this time, has been requested to hand 
you this letter. 

Respectfully submitted, 

RICHARD A. McCURDY, 

Vice-President. 

Mr. Bartlett—I have a statement here which, if the committee 
please, I will now proceed to read. 

The Chairman —The statement you proceed to read is what ( 

Mr. Bartlett —I was going to read this letter addressed to you 
by our vice-president, in continuation of the same subject that Judge 
Davies has been addressing you upon. It sets forth in more detail 
the reasons why an earlier compliance with the requirements of 
Mr. Bixby’s resolution, introduced in the Senate, was not furnished. 
With your permission, I will read. 

Mr. Lang —If this statement consists of essential facts with ref¬ 
erence to which we are making inquiry, it should be made on oath. 

The Chairman —Does it contain information ? 

Mr. Bartlett —Yes ; it is full of statistics. 

The Chairman —Are they facts of which you have knowledge % 

Mr. Bartlett—I have knowledge of them. 

The Chairman —Does it contain the information asked for ? 

Mr. Bartlett —It contains all the information asked lor, and a 
oreat deal more. 

•Tj 

The Chairman —Is it within your knowledge \ 


3 


Mr. Bartlett —1 es, sir; both of these papers are sworn to by 
the president and the vice-president; I will also swear that I have 
investigated the subject pretty thoroughly, and I believe them all to 
be true in fact. 

The Chairman —It is for the committee to say whether they will 
have the statement read, and take it for what it is worth as far as it 
goes. 

Mr. Lang —We cannot tell whether it contains what we are in¬ 
quiring after until it is read through. 

The Chairman —Mr. Bartlett says it does. 

Mr. Lang —The question for us to decide is, whether it gives what 
we are after. 

The Chairman —The committee will only receive what is inquired 
after, and what is within Mr. Bartlett’s personal knowledge. 

Mr. Bartlett —The officers of the company do not wish 'to be 
regarded as contumacious. It was absolutely impossible for us to 
collect the information asked for at the time. We were engaged in 
a very exhaustive examination at the time, not only by the Superin¬ 
tendent of the Insurance Department, but also by the trustees, and 
we were just on the eve of making our annual statement to the State 
department, consequently we were overwhelmed with business. One 
reason for this was the change made in the insurance commissioner. 
We had to look over our books and collect the information required, 
and this we could only do when we could get a little suspense from 
the labors of the office. 

Mr. Cowdin —I think we shall save time by letting Mr. Bartlett 
go on and make his statement in his own way ; he has a statement 
here, and I think the company should be allowed to make any state¬ 
ment they wish in their own way. 

The Chairman —Are the statements contained in that communica¬ 
tion such as you know yourself to be true? 

Mr. Bartlett —I know them to be true as well as I can know any 
thing. I have examined the book, and know all the transactions 
through the various officers, and there is nothing contained therein 
that I would not be willing to swear to myself, to the best of my 
knowledge and belief. It must be borne in mind, however, that the 
facts contained therein were prepared for the Superintendent of the 
Insurance Department. 

The Chairman —Proceed with your statement. 

Mr. Bartlett —The letter is as follows : 


To the lion. J. G. Graham, Chairman'. 

Sir —In furnishing a written answer to the questions embraced 
in the resolution, passed by the Assembly of this State, as follows: 

“ Resolved , That the insurance committee of this House be re¬ 
quired to summon the president, vice-president, secretary and actuary 
of the Equitable Life Assurance Company, the Globe Mutual Life 
Insurance Company, the Knickerbocker Life Insurance Company, 
the Metropolitan Life Insurance Company, the Mutual Life Insur¬ 
ance Company, the Hew York Life Insurance Company, and the 


4 


World Life Insurance Company, and require a statement, under 
oath, from each of them, as to the amount paid in salaries, fees r 
compensation or donations to their respective presidents, vice-presi¬ 
dents, secretaries, medical examiners, attorneys, counsels, and all 
other employees for the year 1876, and report the result of such ex¬ 
amination to this House in ten days.” 


The following explanation seems proper to be made: 

A resolution similar to the foregoing, but imposing the duty of 
eliciting the information sought upon the Acting Superintendent of 
the Insurance Department, was passed by the Senate, by the motion, 
of Senator Bixby, in January last, and a copy addressed to this 
company. 

At that time, two minute and exhaustive examinations of the 
company’s condition were in simultaneous progress at its office, one 
conducted by a committee consisting of six of its trustees, appointed 
by the board for that purpose; and the other by the said Acting 
Superintendent of the Insurance Department, aided by his deputy 
and several assistants. 

Oppressed by the arduous labor imposed on the clerical force by 
these two examinations, and the necessity of attending on the com¬ 
pany’s regular business at the same time, the officers asked that they 
be allowed to procure from the books a portion of the information 
called for, viz.: That respecting the amount paid to attorneys and to 
medical examiners, during the intervals of other labor, and promise 
to complete and furnish their report on receipt of notice from the 
acting superintendent of the time when his report to the Senate was- 
ready for transmission. 

This was acceded to, but by oversight or inability to send a notice 
in time, the late acting superintendent presented his report tO' the 
Senate, no notice of his intention having been furnished to- this 
company. 


The communication, which is hereto annexed, contains full and 
true answers to the questions contained in Senator Bixby’s resolu¬ 
tion, and by consequence to those contained in the resolution of the 
honorable the Assembly of this State ; it was completed on the day 
of this date, and verified by the president on the date of the jurat 
appendant, and would have been forwarded to the late acting; 
superintendent, except for the misunderstanding above referred to A 
All of which is respectfully submitted, 

BICHARD A. McCURDY, 

, „ , Vice-President. 

March 17, 1877. 


City and County of Hew York, ss.: 

Richard A. McCurdy, of said city, being duly sworn, deposes and 
says that he is the vice-president of the Mutual Life Insurance Corn- 
pany of Hew Yoik, that the facts set north in the foregoing state¬ 
ment are true to his own knowledge, and that the fa$ts set forth in 
the statement hereto annexed are true to his own knowledge, except 


.as to such as are stated on information and belief, and that as to such 
facts he believes them to be true. 

RICHARD A. MoCURDY. 

.'Sworn and subscribed before me this ) 

17th day of March, A. D. 1877. ( 

William (t. Davis, Notary Public. 


The Mutual Life Insurance Company of Hew York, ) 
Corner Liberty and Broadway, V 

New York City, February 13, 1877. j 

Lion. William Smyth, Acting Superintendent Insurance Depart¬ 
ment : 

Dear Sir.— We are in favor of your letter inclosing the follow¬ 
ing resolution passed by the Senate: 

“ Resolved , That the Superintendent of the Insurance Depart¬ 
ment be and he hereby is requested to obtain from the various life 
insurance companies incorporated under the laws of the State of 
New York a detailed statement showing the amount paid in salaries 
fees or compensation, or donation to their respective presidents, 
vice-presidents, secretaries, medical examiners, attorneys, counsellors 
.and other employes, in the year 1876 ; and that such information be 
furnished to the Senate at the earliest day practicable. 1 ’ 

We presume the Senate would deem it an incomplete and unsatis¬ 
factory report were we to give that honorable body, in response to 
.that resolution, a bald statement of figures, limited to the points of 
inquiry which they have addressed to the different life insurance 
.companies through you. This would not only be unjust toward that 
respectable body, but toward the companies reporting, as they em¬ 
brace corporations of small accumulation and limited business, to¬ 
gether with those which, by the force of circumstances, control large 
accumulations and extensive business. 

We therefore, consider it within the line of our duty in the items 
requested, to give also such existing facts as will enable the Senate 
to judge of the propriety of the company’s course in reference to its 
expenses for salaries with intelligence and full appreciation of the 
.subject. 

This company has been in existence since 18L3. It is without 
capital, and the first cash it received and possessed was the first pre¬ 
mium paid on a policy, amounting to one hundred and eight dollars 
.and fifty cents ($108.50). All of its accumulations have been from 
its premium receipts and the interest and income growing out from 
the same. 

At present it has in force ninety thousand one hundred and twen¬ 
ty-five (90,125) policies, insuring three hundred and one million two 
hundred and seventy-eight thousand and thirty-seven dollars 
.($301,278,037); and its business, specified in your letter and the reso¬ 
lution accompanying it, that is, the year eighteen hundred and 
.seventy-six (1876), was the issue of eight thousand one hundred and 
.twenty (8,120) policies, the receipt of fifteen million one hundred 


I 


6 

and thirty-six thousand seven hundred and three dollars and tliiitj- 
six cents ($15,136,703.36) premiums, the issue monthly ot over 
twelve thousand (12,000) receipts over the country, and connected 
with the same and in addition, the mailing of a like numbei ot, 
called for by the action of the Legislature, during the past yeai. 

It purchased for cash four thousand five hundred and seventeen 
policies on surrender, and paid for the same during that penod 
$3,619,623.18 (three million six hundred and nineteen thousand six 
hundred and twenty-three dollars and eighteen cents). 

Its medical department conducts the necessary correspondence, 
with over six thousand physicians in different parts of the country, 
the examination of applications for insurance, the examinations into 
causes of death claims, and the collection of such statistics as will 
throw light on our business and benefit the community at large. 

In its law department it has examined and certified the titles to 
four hundred and seventy-one loans on bond and mortgage, amount¬ 
ing to three million six hundred and thirty-five thousand and four 
hundred dollars ($3,635,400) without charge to the borrowers, except 
the necessary disbursements for official searches. That department 
has the supervision and management of all foreclosure proceedings 
and litigations in any way relating to the company. 

The company has also permitted during the year the use of two 
million six hundred and ninety-four thousand forty-three dollars and 
thirty-four cents ($2,694,043.34), being the cash value of the divi¬ 
dends standing to the credit of policyholders in the payment of their 
annual premiums, each of which recpiired separate and careful esti¬ 
mate and examination. 

It has also paid, after proper scrutiny, claims by death under its 
policies, amounting to three million three hundred and eleven thou¬ 
sand six hundred and fifty-one dollars and two cents ($3,311,651.02), 
with the additions to the same of four hundred and thirty-nine thou¬ 
sand seven hundred and eight dollars and eighteen cents ($439 ; ,708..- 
18). 

In its department of securities it controls and cares for twelve 
million six hundred and seventy-three thousand five hundred and 
seventy-nine dollars and thirty-three cents ($12,673,569.33) in stocks 
of the description approved by the State laws and the Insurance De¬ 
partment in the bonds and mortgages on the real estate, amounting 
to sixty million eight hundred and fifty-six thousand two hundred 
dollars and eighteen cents ($60,856,200.18). These mortgages are 
to the extent of about $50,000,000 upon property within the State 
of New York, and scattered throughout the towns from Lake Erie 
to the ocean in sums of $1,000 and upward. 

On these sums interest has to be collected semi-annually, and the 
sufficiency of the security examined from time to time, and, where 
necessary, strengthened. The loans are nearly all due and subject to 
the call of the chairman, and subject to the call of the company. 

The company holds, as collateral security to its loans, policies of 
fire insurance from one hundred and fifty (150) companies, amount¬ 
ing to thirty-four million five hundred thousand dollars ($34,500,- 
000). Our loans during the year amounted to five million, nine hun- 


dred and sixty-two thousand nine hundred and twenty-six dollars 
and seventy-seven cents ($5,962*926.77). 

The aggregate of the securities of this company, as stated in the 
recent report of the insurance superintendent, is eighty-two million 
seventy-six thousand seven hundred and six dollars and eighty-seven 
cents ($82,076,706.87), a sum larger than that of the capital of all 
the national banks of New York city, and, it is believed, the largest 
sum owned and controlled by any moneyed corporation in this coun¬ 
try or the world. 

The persons necessary to carry on its business, and officially con¬ 
nected with it, are, in addition to the president, two vice-presidents, 
two secretaries, one head of the law department, two medical exam¬ 
iners, one actuary and two, assistants, and 110 clerks and other em¬ 
ployes at the central office. 

This statement, in brief, will enable the Senate to judge intelli¬ 
gently as to the responsibility and extent of the business of the com¬ 
pany, and whether the staff and employes who manage it during 
such times as these are either too large or are too largely paid. 

We believe its expenses, all told, are a less per cent of its present 
and future obligations than those of any similar institution. They 
are, for officers and clerks, thirty-eight hundredths (.38) of one per 
cent on the assets of the company which they have in charge. On 
the active business of the company in receipts, one and fifty-six hun¬ 
dredths (1.56) per cent; and in insurance, one-tenth of one per cent. 

We subjoin the answer to your question as follows: 

Amount paid, in salary, to the president during the 
year 1875 .... . 

Amount of salary paid to vice-president 
Amount of salary paid to second vice-president 
Amount of salary paid to secretary 
Amount of salary paid to assistant secretary 
Amount of salary paid to actuary 
Amount of salary paid to assistant actuary . 

Amount paid to assistant actuary 
Amount of salary paid to medical examiner 
Amount of salary paid to medical examiner . 

Amount of salary paid to solicitor, attorney and 
counselor .... 

Amount paid to 110 clerks and other employes 


$30,000 00 

18,000 00 

12.400 00 
8,000 00 
5,100 00 
5,000 00 
7,200 00 
4,800 00 
9,600 00 
9,600 00 

14.400 00 
191,463 61 


No officer, clerk or other person in the company’s office receives 
any fees, compensation, donation or perquisites of any kind, except 
the salary voted to him by its board of trustees in consideration of 
his services. 

Medical examiners residing in different parts of the country are 
compensated by fees ranging from two (2) to five (5) dollars for each 
physical examination of applicants for insurance. The amount so 
paid during the year was thirty-eight thousand five hundred and 
sixty-nine dollars’and thirty-one cents ($38,569.31). 




8 


The amounts paid to attorneys and counselors residing in different 
parts of the country, was seventeen thousand seven hundred and nt- 

teen dollars ($17,715). 

All of which is respectfully submitted 

F. F. WINSTON, 

President. 


City and County of New \ ork, ss. : 

Frederick F. Winston of said city, being duly sworn, deposes 
and says that he is president of the Mutual Life Insurance of New 
York, and that the signature affixed to the foregoing document is 
the true signature of deponent. That said document, consisting of 
eight pages, contains a full, true and accurate answer to the resolu¬ 
tion of the Senate of the State of New York, dated January 16, 
1877, and recited therein. 

F. F. WINSTON, 

President. 

Sworn and subscribed this 21st day of ) 

February, a. d. 1877, before me, j 

W illiam G. Davies, 

Notary Public. 


William H. C. Bartlett sworn. 

Examined by Mr. Moak : 

Q. How long have you been connected with this company as act¬ 
uary? A. I joined the company the 1st of February, 1871. 

Q. And you have since been connected with it ? A. All the time. 

Q. Had you previously had any connection with it ? A. I had on 
several occasions solved several difficulties for the company alleged 
by themselves to be encountered in the adjustment of their accounts. 

Q. You had no regular connection with them? A. No regular 
connection. 

Q. You said in that statement you read that the company had, at 
the present time, 92,125 policies ; in that did you include the num¬ 
ber surrendered during the past year, or did you exclude them ? A. 
I have given you the number which the company had at the end of 
the year. 

Q. The year 1876 ? A. The resolution calls for the information 
we had in 1876. 

Q. Then it is exclusive of the number surrendered during the 
present year; as to the number, have you any personal knowledge ; 
I mean for this year ? A. Nothing more than I get from the books. 

Q. Have you personal knowledge of it from the books ? A. Yes, 
sir; I want to state to the committee that it is utterly impossible for 
any man to carry with him all the numbers of the company so vastly 
engaged in business as this company is ; when I want any informa¬ 
tion I call on the heads of proper departments for it and then go to 
the books; as to the detail of keeping the books I know nothing. 

Q. Then, if I understand you, the number you get from the books 


9 


which is furnished to you by other employees? A. Yes, and which 
I believe to be true. 

Q. That is the only knowledge you have on the subject ? A. Yes, 
.sir. 

Q. As 1 understood you, those policies represent $301,278,037 in¬ 
surance ? A. No, sir; I expressly stated that that was the cash value 
•of the insurance. 

Q. That is to say, that is the present value of them ? A. Yes, of 
the insurance and the cash value ; are you speaking now of the cash 
values ? 

Q. No; I am speaking of the 92,125 polices ? A. That is the 
amount of the policies we have insuring about $300,000,000. 

Q. Then the $301,278,037 covers the entire amount insured by all 
these policies ? A. Exactly. 

Q. But that does not give the present cash value of them ? A. 
Oh, no. 

Q. I understood you to say that in 1876 there was issued 8,120 
policies ? A. Yes, sir. 

Q. Insuring the persons to whom the policies were issued to the 
amount of $15,136,703.36 ; is that correct ? A. Yes. 

Q. Now, as to the number of policies issued, and amount insured, 
you obtained that the same as the others, of which you have spoken ? 
A. From the books. 

Q. And you said that during the year 1876 there was surrendered 
4,517 policies, the value of which and for which they was paid 
$3,619,623.18? A. That is right. 

Q. Now let me ask you whether you have any knowledge as to 
whether the company has had any person in its employ for the 
purpose of procuring those surrenders ? A. Well, I can’t say posi 
tively. 

Q. In other words, what I want to get at is this— A. I under¬ 
stand perfectly what you want; the company, I am certain, has never 
countenanced the employment of anybody to procure the surrender 
of the policies; on the contrary, it has assisted persons to every pos¬ 
sible extent within a range of years to keep their policies alive; I 
regard it as a matter of great importance to the companies to keep 
their policies alive, for as actuary for the company, I look at it that 
the getting of a policy by surrender is the stopping of a little rill 
through which is to how the means to pay the death claims; I know 
it has been done recently by those records, and so forth, which, by 
the way, is a new word introduced into life insurance, but we have 
no sympathy with it. 

Q. The question is, has the company had any one in its employ in 
the last year to obtain the surrender of policies? A. Not to my 
knowledge. 

Q. Were those surrenders, so far as you know, all of them volun¬ 
tary surrenders without an application by the company or any one 
in its interest ? A. So far as I understand, they were voluntary sur¬ 
renders on the part of the holders. 

Q. Was any thing paid for procuring the surrenders, except what 
was paid to the parties ? A. Not to my knowledge, nor do I believe 


10 


any thing was paid except to the parties themselves ; whatever the 
agents may have extorted I cannot say, but I know if an agent was 
detected in doing so he would be dismissed from the company. 

Q. I understood you to say you had paid physicians for examina¬ 
tions, during the past year, $38,569.31; if there were 8,120 policies 
issued, that would be nearly live dollars for each policy, would it not ? 
A. Well, I have not made a computation, but that is the amount 
taken from the books actually paid; we paid some a little more, some 
a little less. 

Q. What is the usual price paid by your company for physicians’ 
examinations ? A. As near as I can remember, five dollars. 

Q. Throughout the country? A. Yes, sir; from two to five; they 
vary. 

Q. That is paid out of the premium, is it ? A. That is paid by 
the insurer. 

Q. That is, the company receives the premium in addition to this 
amount? A. Yes, sir. 

Q. So really this is not an expenditure by the company? A. No, 
but we do examine a great many by our examiners and don’t charge 
any thing for it. 


By Mr. Cowdin : 

Q. That is in New York? A. Y es; but it might be that there is 
a charge by those local physicians, but I think persons who have 
been re-examined for insurance were always required to pay the 
charges. 

By Mr. Moak : 

Q. What you mean by that I suppose is, if a party insured has 
not paid his premium, and it is a question under deliberation wheth¬ 
er the policy shall be allowed to be continued, you require a re-ex¬ 
amination ? A. Yes, sir; and it is always at his own expense. 

Q. Then really this $38,569.31 is an expenditure by the insured 
rather than the company ? A I don’t know about that; I don’t 
know but that may have been stopped out from the premiums by 
others; I am not certain, and cannot tell you the amount paid by 
the insurer and by the company. 

Q. T ou don t mean to say, considering the manner in which you 
make the examination at the expense of the insurer, that the com- 
pany has paid that in addition { A. That, I undertand is the 
amount the company has paid. 

Q. Independent of the amount paid by the insurer ? A. Yes. 

Q. Then what was the amount paid by the company for if every 
person applying paid for his examination ? A. I don’t know that I 
exactly understand that question. 

O W f- !1 ! 1 ®, x P lain ifc t0 y° u ; y° u have said that there were 
8,120 policies issued in 1876 ? A. Yes, sir. 

Q. Each of those persons was examined by a local physician ? A 
i es; either by our own physician or a local physician. 

Q. Either by your own examiner m New York or one of your 
other examiners ? A. Yes. J 


11 


Q. And each person so examined was required to pay out of his 
own pocket for the examination ? A. Yes, sir. 

Q. Then no part of the examination of the 8,120 persons was paid 
by the company ? ' A. No. 

Mr. Li ,oyd —1 think Mr. Bartlett is in error there. The expense 
of the medical examination is paid by the company, and not paid by 
the party applying for the insurance. 

By Mr. Moak : 

Q. Then it is perhaps fair the witness should state lie was mis¬ 
taken in saying the examination was paid by the insurer; is that the 
fact? A. Yes, sir; I was mistaken. 

Q. Would that explain this $38,569.31 fees that was paid by the 
company to all those examiners during 1876 ? A. Yes, sir. 

Q. Except to the examiner at the leading office ? A. Yes, sir ; I 
wish to have that straightened; I state that where a policy has 
lapsed, and he wishes to be reinstated, then a new examination is 
required, and in such case the applicant is required to pay the ex¬ 
pense of the examination. 

Q. I understood you to say that during the past year of 1876 there 
were 471 loans made by your company on bond and mortgage? A. 
Yes, sir. 

Q. Amounting to $3,638,400 ? A. Yes, sir. 

Q. They are loans in the city of New York only? A. Yes, sir. 

Q. And in those cases the entire expense of searching the titles 
and of preparing the papers is paid by the company ? A. They are 
done by the officers of the law department. 

Q. The expenses are paid by the company, are they, in general 
salary ? A. They are paid in salary, except the expense of searching 
the titles. 

Q. The searches are paid for by the borrower? A. Yes; to the 
attorney who makes the search. 

Q. Who makes the search usually, the law officers of the company 
or the attorneys of the borrower ? A. The attorneys communicate 
generally with the company; for instance, at White Plains we can’t 
attend to it in New York, and have an agent there. 

Q. Well, take an instance in New York, and say a person applies 
for a loan of $20,000? A. We apply to the clerk for a search, and 
the fees are a regular charge to the borrower. 

Q. Is any thing charged except the fees paid to the clerk for the 
search ? A. Not that I know of. 

Q. The $3,638,400 were loans in the city of New York only dur¬ 
ing the past year, I understood you to say ? A. I believe so. 

Q. You said there was $2,694,043.34 used in payment of annual 
premiums from the cash balance remaining to the credit of the in¬ 
sured, as I understood you ? A. No, sir ; let me explain that; at 
the end of every year we make what is called a dividend, and the 
cash amount of that dividend is converted to the reversions, and is 
credited to the policyholder; and when the anniversary of the policy 
comes around, and he wants to pay liis premium, he may not have 
the money, and would want to use that credit to pay his premium; 


12 


that is then reconverted into cash, and his premium is paid with it. 

Q„ Then, nominally, although not actually, you pay him so much 
money and he applies it on his premium? A. T es, we cancel his 
reversion to that extent. 

Q. You mean you cancel his premium to the extent of what you 
■call the reversion ? A. Yo ; the reversion is the thing to be paid at 
death; the present cash value of the reversion is quite another 
thing; it is the present cash value that is paid to him. 

Q. I understood you, at the end of every year, yon gave certain 
credits to what you call the insured ? A. Let me explain that, so 
that I can make myself clear; as I said before, at the end of the year 
we make the dividends, and we notify our policyholders at the anni¬ 
versary of the policies that they have the dividends, so that they may 
use them; I have interested myself to get them in advance so that 
our policyholders may use them as so much cash when they were 
declared; they rest for thirty days, and if used within that time they 
are cash dividends themselves, and we pay that over to the policy¬ 
holder, and he pays us for his premium from that money ; if not 
used in thirty days, we enter this as reversion; that goes on as a new 
insurance, and is equivalent to a new policy, and so much to his 
credit; after awhile, say the next year, he may have the same amount 
of dividends, but not enough to add to it to pay his premium, as it is 
not always the case that the reversion will pay the premium, he says 
then reconvert my old conversion and get me enough money to eke 
out my premium with. 

Q. Say I am insured in your company for $10,000 ; at the end of 
the year you declare me a dividend for how much ; say I have been 
in ten years ? A. Well, we will declare you a dividend of fifty or 
sixty per cent, of the premium ; more than that, perhaps ; sixty or 
seventy, perhaps. 

Q. That amount you give me credit for on your books ? A. Yes. 

Q. What do you call it—dividend or reversion? A. We have on 
your special account a cash dividend. 

Q. T ou call it dividend; is that what you call it ? A. It is a mis¬ 
nomer ; it is cash paid. 

Q. Well, that you call a dividend ? A. Yes, sir. 

Q. We will assume my premium becomes due within thirty days; 
I may have the $150, or whatever amount it is, credited on the pre¬ 
mium if I choose to do so ? A. Yes, sir. 

Q. Do you mean this $2,694,043.34 was used in that way to pay 
up policies ? A. Yo; I do not wish to be understood that all was, 
but a very large portion was used that way; as I stated, you will 
come to the company and may be a little pressed, and it may not be 
convenient for you to pay your premium ; it may be more convenient 
for you to us3 the money another way; you say I have a reversion 
standing to the account of dividend, and I want that reconverted 
into cash and the premium paid, and that embraces all those paid in 
that way. 1 

Q. Does this $2,694,043.34 include all the dividends which your 
company declared to your stockholders in 1876 ? A. Yo, sir, nothin^ 
like it; we declared dividends amouting to over $4,000,000. 


13 


Q. Have you any means of stating the entire dividend; declared 
during the year ( A. Yes : I can give it at once. 

Q. And give the year, please ? A. I have a paper here which I 
think contains it; I know it is $3,700,000 odd this year. 

Q. That was the aggregate of all the dividends declared l A. 
Yes; I think so; I am very anxious that you should get all these 
points out; I see it is $3,701,700. 

Q. How, 1 understood you to say your company had paid during 
1876 $3,311,651.02 losses? A. For death claims. 

Q. Yes; I mean losses in insurance? A. Yes, sir. 

Q. Was any portion of that amount litigated? A. I think prob¬ 
ably some portion was, but what amount I cannot state. 

Q. Have you any means of stating what the proportion of the 
amount was ? A. It is very small; 1 forget the proportion, but I 
know it is exceedingly small; the company did not litigate to exceed 
eight or ten cases during the year, to my best recollection. 

Q. How much would they represent in amount, the whole eight 
or ten, probably ? A. I should not think more- than $25,000 or 
$30,000; perhaps $40,000, 

By Mr. Lang : 

Q. Does he mean by that that they are the only contested cases 
on the policies of insurers? A. Yes, sir; the only cases. 

By Mr. Moak : 

Q. And they were all the cases where policies were litigated on 
losses during the last year? A. Yes, sir. 

Q. How, let me ask you whether that would represent, say for the 
past ten years, a fair proportion of the amount of claim your com¬ 
pany has litigated ? A. I should think it would; it is a matter I 
don’t concern myself a great deal with, as being connected with the 
actuary’s department, it does not come under my immediate notice ; 
I am not cerfain about it. 

Q. You stated that to this $3,311,654.02 there was to be added 
$479,708.18 ; I don’t quite understand why that was to* be added? 
A. Those are additions; I just told you those dividends are given 
or converted into reversions; they form new policies of insurance, 
and that is the amount. 

Q. Then you mean that in addition to the first amount of over 
$3,000,000 you paid $479,708.18 to the same parties?. A. Yes, sir ; 
in addition. 

Q. Then that w T ould make the entire amount paid by your com¬ 
pany during the year, as I make it r $3,791,350.18?. A. Yes, sir;; 
something about that. 

Q. I understood you to say your company had! at the present time 
invested in stocks, of the character approved by the statutes of this 
State $12,673,569? A. Yes, sir. 

Q. That is in stocks exclusively? A. Yes y sir ; which could be 
converted, if necessary, in six hours, into cash.. 

Q. Describe the general character of the stocks?. A.. I can give 


u 


it to you from the report; the amount and character of each will be 
found upon page twenty-six of this little pamphlet. [Pamphlet pro¬ 
duced]. 

Mr. Weiant —Won’t you inquire whether he has any knowledge 
himself of the amount of the securities, or whether he bases his 
answer entirely upon the report ? 

Witness —No ; I base it entirely upon my general intercourse 
with the officers of the department and the information I obtained 
from them. 

Judge Davies —I was chairman of a committee which made an 
examination at the same time the Insurance Department of the State 
was examining the company; every single stock was examined per¬ 
sonally by us, and we can make an affidavit that every dollar is there 
as stated 

The Chairman —There may be facts specially in the knowledge of 
Mr. Bartlett rather than any other officer, and those it is important 
we should get. 

Q. Will you state whether you have any personal knowledge of 
the company owning these various amounts of bonds, and of the 
character stated here % A. I know it as I know anything; I have 
this knowledge, that I looked over the books ; I have seen them in 
the books, and have seen them counted, and know they are in our 
possession ; that is my knowledge about it; it is the same kind of 
knowledge a person gets of every commercial transaction where he 
has to base his knowledge on the correctness of books. 

Q. The first item is United States registered bonds, $7,473,550 
par value ; do you know of your own knowledge the company has in 
its possession that amount of registered bonds ( A. Well, I can’t 
swear to that, but I believe it; I cannot swear they have that 
amount in their possession. 

Q. Or that they had it at this time, December, 1876 % A. I have 
no doubt of it; I believe they had. 

By Mr. Weiant : 

Q. You know it of your own knowledge? A. No, sir ; not of my 
own knowledge. 

By Mr. Moak : 

Q. And you would say the same as to each of the various items ? 
A. Yes, sir; every one; it don’t fall within the range of my duties 
to have a personal knowledge of these matters, but I have examined 
them and have a great deal to do with the adjustment of the accounts 
in making up the annual statement. 

Q. I am requested to ask you to describe, briefly, the general out¬ 
line of your duties ? A. My duty is to take charge of, direct and 
manage, the mathematical department of the Mutual Life Insurance 
Company, by which, it must be understood, I regulate and control 
the formula by which all calculations are made and estimated, rever¬ 
sions of all kinds of premiums, reserves, the distribution of surplus 
and all things pertaining to the payment to policyholders of the 


15 


money of the company. Is that distinct to you or not? It will re¬ 
quire me to write a book almost to give you all the facts, for things 
are coming up every day entirely new, and, if I were to explain to 
the committee, I think it doubtful if they would understand me, as 
it is so full of technicalities. 

By Mr. Wei ant : 

Q. Do you have any other duties to perform connected with the 
company? A. No, sir; I am the actuary of the company. 

Q. 1 on have no other duties there than those you have specified ? 
A. No, sir. 

Q. Is it not your duty to examine the securities ? A. No, sir. 

Q. Or whether the bonds are invested according to law? A. Not 
unless I am required to do so by the president and officers of the 
company. 

Q. It does not fall within your line of duty? A. No, sir. 

Q. It does not fall to your duty to examine whether the securities 
are intact and in the possession of the company ? A. No, sir. 

Q. Is it your duty to know whether the representations here made 
are correct ? A. Yes, sir. 

Q. Those made now to the committee I mean? A. Yes, sir; we 
have a great deal to do with it, and that is the way that I get my 
information by my general intercourse with the books and personnel 
of the company ; I get my knowledge that way. 

By Mr. Moak : 

Q. You stated that there were outside of the city of New York, 
if I understood you rightly, $50,000,000 of the assets of the com¬ 
pany invested in bond and mortgage; am I right m that ? A. No, 
not outside of the city of New York ; I think not; in the State of 
New York at different points. 

Q. Then in the $50,000,000 which you give as invested in the 
State of New York would be included the $3,635,400 which you 
said was invested in the city of New York? A. Certainly; yes. 

Q. Have you any personal knowledge of the value of any of the 
real estate covered by those mortgages ? A. I have not, sir. 

Q. So that you can give us any information in regard to the value 
of these securities as to whether the money is well or ill secured ? A. 
No, sir; it is left to the committee of trustees pretty much; the 
committee whose business it is to examine it. 

Q. Describe to the committee the manner or mode by which a 
loan is obtained ? 

Judge Davies —I would suggest that I can give that information 
better than Mr. Bartlett; it is outside of his department—I will give 
you all the information you desire. 

Mr. Moak —Then, with the permission of the committee, I will 
leave the subject for the present. 

Q. You stated that your company held $34,500,000 of fire insur¬ 
ance policies; it is policies, I suppose, which are collateral to the 
mortgages which you hold upon the premises and real estate mort¬ 
gaged? A. Yes, sir. 


16 


Q. So they are really collateral security for some amount >, A.. 

~\T • 

l es sir. 

Q. And don’t represent an independent fund ? A. -N” 0 - 
Q. Your new loans during the past year, as 1 understand you, 

were $5,962,926.77? A. Yes, sir. 

Q. Those were new loans ? A. 1 es, sir. , q 

Q. And those are included in the $50,000,000 as you have stated ? 

A. Yes, sir. . . 

Q. Let me ask you whether you have any loans or any secuiities 

by bond and mortgage upon real estate outside of the State of JN ev 

York? A. Yes, sir. 

Q. Where is that located ? A. Our charter authorizes us to go- 
within a circle the circumference of which is fifty miles and the centre 
being the city hall in Yew York city ; our charter has since been in¬ 
creased, I believe by the Legislature and we can go into Ohio and 
Pennsylvania, but I do not think we have availed ourselves of that 

right as yet. > 

Q. Have you any mortgages outside of this limitA. I don t 
know, sir ; I know that the charter boundary has been extended, 
over which our loans may be spread, but whether there are any loans 
there or not I cannot say. 

By Mr. Wei ant ; 

Q. You cannot say whether money is loaned outside of that ra¬ 
dius ? A. Yo, I could not say whether they had loaned any outside 
of that limit or not. 

Q. Is it not part of your duty to know whether they had loaned 
outside of it or not? A. Yo. 

By Mr. Moak : 

Q. I see there is an account of losses not yet paid amounting to- 
$758,750? A. Yes, sir. 

Q. Why, if your company pays losses, as you say, was there so- 
large an amount unpaid at the time of the report ? A. We have 
sixty days grace in which to pay our losses in. 

Q. The item is, unpaid losses not yet due, including resisted claims, 
$758,750 ? A. That is unpaid losses not yet due, and refers to those 
which will become due in sixty days after the proof of death. 

Q. And that is the only reason why they were not paid? A. Yes,, 
except in cases of litigation. 

Q. You stated how much during the last year was litigated, or 
gave an approximate estimate of it, can you give us an approxima¬ 
tion of how much is the entire amount you have in litigation, say 
on the thirty-first of December? A. Yo, I cannot; that belongs to 
the law department. 

Q. 1 our first item of expense is the amount paid in salary to the 
president during 1876, $30,000? A. Yes, sir. 

Q. Did the president receive from your company, or from any of 
its officers, any sum, either directly or indirectly,, beyond that ? A.. 

I do not believe he did. 


17 


Q. Do you know? A. I cannot swear absolutely, positively that 
be did not, but I do not believe he received a single cent. 

Q. Do you know whether he did or not, of your own knowdedge ? 
A. No, I cannot say that he did or did not. 

Q. Let me put this state of facts: did your company, during the 
year, make any reinsurance with other companies against risk ? 
A. No, sir. 

Q. Not a dollar? A. No, sir ; not that I know of. 

Q. Did your company procure any reinsurance of any company ? 
A. No, sir ; I have no knowledge of it; it would not come in my 
purview. 

Q. Have you any knowledge that it was done? A. I am certain 
it was not done. 

Q. Does your company take any reinsurance ? A. No, sir. 

Q. Nor does it reinsure in other companies ? A. No, sir; we 
think we are our best insurers ourselves. 

Q. How is the amount of the president’s salary arrived at, by 
resolution at the commencement of the year, or by a compensation 
or per centage upon the amount of business? A. It is by a resolu¬ 
tion, so much in a round sum, by the board of trustees. 

Q. The board of trustees, at the commencement of the year or at 
the expiration of the year, fix it ? A. It is fixed and is the standing 
salary for some time; I think the president’s salary was increased a 
certain amount some three or four years ago; I have got it here. 

Q. If you can give us the salary of the president for a series of 
years, do so ? A. The president’s salary was increased in 1869, and 
it has not been increased since. 

Q. From 1869 down to and including 1876, the president’s salary 
has been $30,000 a year ? A.’ That is what I understand, sir. 

Q. Was it fixed each year at the commencement of the year, or 
fixed in 1869 at that sum and allowed to run along ? A. I believe 
it was fixed in 1869 ; that is my belief about it. 

Q. And it is fixed at that sum in round numbers,without reference 
to a per centage on the amount of business ? A. It has nothing to 
do w T ith the amount of business; there might be some such instance, 
but it was before I was connected with the company ; I have only 
been connected with the company since 1871, and can only testify 
since then. 

Q. And the figures you have given for the two years previous are 
upon information ? A. Yes. 

Q. What was the salary, from your information, previous to that 
time ? A. I don’t know. 

Q. Of that you have no knowledge ? A. No. 

Q. Since 1871, when you became connected with the company, 
has the president received, for any other alleged services, any other 
sum from the company, or its officers or agents ? A. Not to my 
knowledge. 

Q. Have you any information of his having received any? A. 
Not at all. 

Q. Does the president devote Ins time exclusively to this business ? 


2 


18 


A. Yes, sir ; entirely ; I find him there in the morning when I get 

there myself, and he remains there all day. . . 

Q. I want to know whether this compensation is for his entire 

•services? A. Yes; for his entire services. > . . 

Q. Is he connected in any way, either directly or indirectly, with 

:any other corporation ? A. No, sir. 

Q. Either as director, manager, trustee, or in any other way ? A. 

Not to my knowledge. 

Q. Or that you have heard of ? A. Or that I have heard of. 

Q. The amount of salary paid to the vice-president you said was 
$18,000? A. Yes, sir. 

Q. How long has that been fixed ? A. Since 1872. 

Q. And has he been paid since that time, to your knowledge or 
any information you have, any sum, either directly or indirectly, 
either by the company or any of its officers, beyond his salary ? A. 
No, sir; not to my knowledge or belief. 

Q. Hoes he devote his entire time to this one company ? A. Yes, 
sir. 

Q. Has he any other business ? A. I am not aware that he has. 
Hy Mr. W eiant : 

Q. Ho you know? A. I don’t know whether he has or not, but 
I believe lie gives the whole of his time and attention to the com¬ 
pany. 

Q. Has he, to your knowledge, or from any information you have, 
any connection, either directly or indirectly, with any other com¬ 
pany, either as director or agent or in any other capacity ? A. I 
don’t know. 

T>y Mr. Moak : 

Q. As to the second vice-president; has he any connection with 
any other company ? A. Not that I know of. 

Q. Or that you have heard of ? A. No. 

Q. Let me ask, does he devote his entire time to the company ? 
A. Yes. 

Q. As to the secretary ; when was his salary fixed ? A. The 
.•secretary ; that refers to Mr. Stewart in 1875. 

Q. I thought he was vice-president ? A. He was first secretary, 
and I find in 1875 he was appointed vice-president, and Mr. Lloyd’s 
salary began— 

Q. I was askiag you when the salary was fixed, regardless of what 
it was? A. I think in 1875 it was fixed ; yes, it was fixed in 1875. 

Q. Ho any of those persons whose salary you have given here, per¬ 
form ^ any other service for the company except in the way vou 
specified ; for instance, does any one man act as second vice-president 
and secretary at the same time and receive compensation for both 
offices? A. No, sir. 

Q. "W hat I v anted to get at is this does the secretary act as vice- 
president and secretary and get two salaries ? A. No, sir ; he does 
not get compensation for two offices; when the vice-president is 


19 


absent some one must do liis duty, but begets no additional compen¬ 
sation for it. 

Q. At any time lias the same person held two offices? A. Not 
that I know of. 

Q. I suppose that answer is the same as to all the persons stated 
here; your answer as given would apply to all of them ? A. As 
far as 1 know. 

Q. And none of them have received any compensation, either di¬ 
rectly or indirectly, under any excuse whatever, beyond the amount 
you have stated as salary ? A. No, sir. 

By Mr. W eiant : 

Q. Do you state that under your knowledge? A. Yes, I think I 
am able to state that. 


v 


By Mr. Moak : 

Q. Now, as to the solicitor, attorney and counsel; they are em¬ 
ployed and paid by the year ? A. Yes, sir. 

Q. By the year? A. Yes, sir. 

Q. And that salary was fixed when ? A. That salary was fixed in 

1874. 


Q. And that has been paid at regular rates since? A. Yes, sir. 

Q. And has he received either as counsel, for any purpose con¬ 
nected with the company, or for making searches or examining titles, 
any thing beyond that ? A. I don’t believe he has; I have no 
knowledge that he has. 

Q. And these 110 clerks you specify, are these all clerks employed 
at the home office? A. Yes, sir. 

Q. Employes of various grades ? A. Yes, sir. 

Q. And do any of those persons receive any compensation beyond 
the amount of their regular salaries ? A. Not that I know of. 


By Mr. Weiant: 

Q. You don’t know, do you? A. Well, it is impossible for me to 
know anything absolutely; I have no knowledge of it whatever, but 
I don’t believe it; I think I would know it if it happened ; I will 
further remark that I think I would be pretty certain to have known 
it if it was so. 

Q. I want to have the examination thorough, so that if that is 
going on and you know it, we may get it ? A. I know, and you 
will get it if it be true. 


By Mr. Moak : 

Q. Do you know whether any member of any of the families, or 
any connexion of either of those officers, have, either directly or in¬ 
directly, received any compensation or money from the company not 
stated in these amounts ? A. I have no knowledge of it whatever, 
sir. 

Q. You never heard of it ? A. I never have heard of it; 


/ 


20 


Bv Mr. Weiant : 

*/ # 

Q. Do you know that they have not ? A. No, sir. 

By Mr. Lang : 

Q. Can you state how many policies lapsed during the past year { 
A. I can give you the exact number, sir, by referring; the number 
is very large in our company, and it is impossible for me to remem¬ 
ber them all. 

Q. Make any reference you please ? A. Now, in order that I may 
be understood, I will state here that lapsed policies would include 
those that lapsed by death and forfeited policies.. 

Q. That is what I want to get at by my question; it is forfeited 
policies ; I don’t mean policies that lapsed by death ? A. We have 
7,501 policies that were forfeited. 

By Mr. Skinner : 

Q. How many did you issue ? A. Eight thousand one hundred 
and twenty. 

By Mr. Lang : 

Q. And you say 7,501 were forfeited ? A. Yes; it is proper that 
the committee should understand this subject, and 1 will say, in order 
that they may do so, that a great many of these will be restored; it 
does not follow that because they are lapsed that they are entirely 
forfeited; you see we are obliged to make up our accounts for the 
insurance commissioner, according to our charter, on the last day of 
December. 

Q. I understand you to say that those that were lapsed under the 
charter, technically lapsed or forfeited, was 7,501 ? A. Yes, sir. 

Q. During 1876? A. Yes; and of these a great many will be 
restored. 

Q. Let me ask what yon mean by that; is the company under any 
obligation to restore them ? A. No, sir. 

Q. But as a matter of policy you mean to say they do it ? A. It 
is a matter of policy and also of liberality ; it would be injurious to 
a company not to act that way. 

Q. But the policy is good for nothing if you elect to treat it so ; 
but if you see lit, in the kindness of your corporate heart, to let them 
back again, they can ? A. We coax them back if we can ; I told 
you 7,501 policies were forfeited ; of that number we bought a large 
amount in cash ; we paid $3,000,000 upon these policies; they lapsed 
because persons gave them up for their equivalent in money. 

Q. Well, do you mean by that, that they were first forfeited and 
then you bought them ? A. That is a mere technicality by which 
we enter them; but in the number I have given you these are 
included. 

Q. When you say 7,501 were forfeited, as you understand the 
force of the technical term used by you, had they any force unless 
the company saw fit to give them force? A. Not at all. 

Q. Then they were forfeited ? A. They were forfeited, but it is 


21 


proper to state that in that number quite an amount of money was 
paid as surrender value. 

Q. After they were forfeited ? A. After they were forfeited; the 
•object of the company was to act with the greatest amount of liber¬ 
ality to the policyholders that it possibly could do with safety to 
itself. 

By Mr. Skinner : 

Q. You say so many were forfeited, and yet you paid over 
$3,000,000 for them; is the condition of a policy such that if it is 
forfeited you are bound to pay any thing ? A. Not legally bound to 
pay any tiling. 

Q. Then that $3,000,000 was a gratuity ? A. It may be so 
regarded; perhaps you had better change the language to suit your¬ 
self ; we put them down a a forfeited ; that is, they were actually 
forfeited; yet we did buy up the claims. 

Q. Why did you buy them up ? A. Simply as a gratuity. 

Q. You don’t feel bound to pay the policyholder a penny after a 
certain time, do you? A. We are not legally bound to pay them 
any thing; but a great many hard cases come to me every day ; I 
don’t think there is any person subjected to such trials as the actuary 
of the Mutual Life is; a poor man or a widow comes and begs for 
bread, and, in the liberality of the government of the institution, 
they having paid a good deal into it, we pay them for lapsed policies. 

Q. Suppose I have a policy for $10,000 which has run for ten 
years, and I forfeited it by waiting sixty days, for instance, without 
paying my premium ; can I recover any amount from you ? A. 
That will depend upon the courts entirely. 

By Mr. Lang : 

Q. Is it not well settled by this time as a matter of law ? A. No 
it is not; an insurance company has no more chance before a jury 
than they have any where else. 

By Mr. Skinner : 

Q. You don’t consider there is any law now which compels you 
to pay any thing on such a policy, do you ? A. That depends upon 
the construction of the law by those who know it better than I do ; 
we have been compelled to pay repeatedly, against what I thought 
the simplest elements of justice and equity; we are compelled to do 
that all the time to avoid* litigation as much as we can by minster- 
ing to the wants of families who have come to trouble after paying 
us money. 

Q. Your policy distinctly states, does it not, that if the policy 
lapses you don’t hold yourselves liable ? A. Let me tell you what 
the practice of the company is : our charter requires us to settle up 
the account of every policyholder every year ; if the premium be 
not paid on several of the policies, what there is or what there has 
been paid prior to the last anniversary under the charter, lapses, of 
course, to the other policyholders; what is technically called the 
reserve of the policy, another misnomer, passes to the other policy¬ 
holders. 


22 


Q. Instead of to the company ? A. To the company first and 
then to the policyholders ; then if the policy is brought to ns, after 
it lapses, but before a division is made, and we can have the means 
of restoring the policy by restoring the reserve, we invariably do it 
after re-examination by a competent physician; that is a matter 
heartily go into and the committee has a right to know. # 

Q. Suppose I take out a policy of $5,000 at a certain date, and m 
a certain number of years I allowed it to be forfeited, and I have 
myself re-examined and find myself in good health ; do you go on 
with the policy at the same rate, or have a new policy ( A. We go 
on with the policy at the same old price, but he must furnish a clean 

bill of health. 

By Mr. Lang : 

Q. I want to ask you this question: I understand you to say that 
in the abundance of its heart the company would do. these things 
but they are under no obligation to do so, as these policies are for¬ 
feited ; suppose as a matter of principle in life insurance, is it safe 
discretion to leave in the hands of a corporation to do that if it 
works an injustice to the policyholders, in your opinion; for in¬ 
stance, suppose you were to go out and a worse class of men should 
get into office in the Mutual Life, and they should not feel so kindly 
to the policyholders whose policies lapse as the present officers do, is 
it sound in principle that a policy should be forfeited when the in¬ 
sured has no interest whatever in them when they are forfeited l 
A. I think it is perfectly sound in principle to leave the discretion 
with the officers. 

Q. You are aware, perhaps, that other states have established non¬ 
forfeiting laws ? A. I have heard of it; I want to remark that a 
great many of our policies require a surrender value. 

Q. I introduced a bill on this very subject, and I want to be put 
right upon it if I am wrong; I think you will see what I am after ;; 
one thing is certain either some companies are making a great deal 
of toot, and getting a great deal of confidence by advertising that 
there is no lapse to their policies when they are not entitled to it, or 
else it is sound in principle; if unsound, is it unwise for us to let them 
get any thing through their mode of advertising; if it is sound, we 
should have a law to compel every company to do it; so if the Mutual 
Life should have bad officers they cannot take advantage of them; I 
want to know if it is not possible to frame some system of legisla¬ 
tion by which the insured, having made certain payments, and finding 
himself unable to keep his policy up, can have a quantum meruit for 
what he has paid, and a paid-up policy given him for a certain 
amount ? A. I can answer that; it will require the terms of the 
policy to be changed ; the terms of the policy may require it. 

Q. Suppose the Legislature should say the terms in the policy, to 
the contrary, should amount to nothing, what is to prevent your 
availing yourselves of it ? A. It will be a great injustice to the com¬ 
pany. 

Q. I was inquiring whether it would not be safer not to have a 
forfeiting clause in a policy, and to provide that a policy should not 


23 


be forfeited so long as there was money sufficiently to pay it? A. I 
think a policy should always cease when the amount of the premium 
is not paid; the interest it receives is the life blood of the company, 
and unless a company can receive the money when it is due, and put 
it out at interest, it is impossible for it to meet its engagements. 

Q. Do you know about the operation of the non-forfeiting plan 
adopted in Massachusetts ? A. I do not know about its operation; 
I think it is a very vicious plan. 

Q. Why so ? A. 1 will state why so: in the first place a man is 
made by that law to lose everything he has paid at the expiration of 
a certain time, for under that law the reserve is taken as the pre¬ 
mium to purchase what is known as term insurance; at the expira¬ 
tion of the term insurance he loses everything; if he were lucky 
enough to die within the time, his family gets the insurance, but if 
he lives to the end of it he loses every thing. 

By Mr. W eiant : 

Q. Unless he renews his premium, you mean? A. No; I don’t 
so understand it; it would be much better for the company to give 
him a paid-up policy, and when he dies his heirs will get something 
back that he has paid. 

By Mr. Lang : 

Q. Suppose you have a policy in Massachusetts for $10,000, and! 
you cannot pay the premium, the money they are required to have 
in reserve for you is made a single premium, and they give you a term 
policy, I don't see that that can be any worse for the policyholder ? 
A. As I stated before, if you are lucky enough to die in that time 
your heirs will get something, but if you are unlucky enough to die 
at the end of the time they get nothing. 

Q. Is it not better to have it in that way than for the company to 
have the option of giving you nothing ? A. It is a mere contingency. 

Q. Is there any objection to giving the policyholder a paid-up 
policy for the value of his reserve ? A. No ; there is this objection ; 
no company can issue paid-up policies for annual-paying policies 
without injury to itself; the policy is good to the company just in 
proportion to its contribution to the other death policies, and the 
very moment you cut this down you cut down the death reserve; or 
in other words, the very moment you give a paid-up policy it ceases 
to be producing. 

Q. Is not that better than forcing a man to stay in a company 
after he has once got in and desires to withdraw from it; or else 
forcing him to lose everything he has paid? A. Yes; and I tell you 
again that our company resorts to every possible means to keep a 
policy alive. 

Q. I want to get your idea whether a law could be framed, and if 
it would be better for the policyholder, which would provide against 
the forfeiting of policies? A. Yes, I think I could ; I have drawn 
two or three laws myself; but I doubt if they have ever reached 
Albany. 


24 


By the Chairman : 

Q. You prefer a paid-up policy very much to the Massachusetts 
plan ? A. Yes ; I think it is a great deal better. 

By Mr. W ei ant : 

Q. You stated that you understand the Massachusetts law to be 
that when the reserve is exhausted, unless the person dies within the 
time before it is exhausted, he forfeits everything £ A. That is my 
understanding of the law. 

Q. If that be the law, could a company successfully conduct busi¬ 
ness by having an additional provision giving the party the right to 
renew the payment of his premiums before that was exhausted ? A. 
I should think it might; yes, sir; but it is almost impossible to 
answer the question, unless I could go into a computation : the com¬ 
pany must be made whole for the risk it assumes, and it is much 
easier to ask the question than to answer it; in order to answer it to 
your satisfaction, I would have to go into a computation of the amount 
of risks the company takes. 

Q. I don’t expect you to be strictly exact, because I know it 
involves a mathematical computation; could the companies of this 
State, in your belief, transact business successfully and issue paid-up 
policies, as you suggest, if any thing was done that w r ay ? A. A es, sir. 

Q. Do you think the business could be carried on successfully ? A. 
Yes, sir. 

Q. At the present rates of insurance ? Yes ; I think so. 

Q. That would be an additional protection to the policyholders, 
would it not? A. Yes, sir; certainly; let me answer that you are 
striving in the Legislature to make some proper law for the protec¬ 
tion of insurers; it seems to me that when a man has an ordinary 
policy upon which he is paying an annual premium, and he is over¬ 
taken by difficulty, and cannot pay his premium, the simplest possible 
way to dispose of the case is to give him a paid-up policy for what 
amount the company has put away on his account, charging him no 
more, and no less, than the price at which it advertises to the public 
to sell for cash; let me further say, as this committee is in search of 
information in regard to a bill, a suggestion I would give you is this: 
the suggestion made of giving a man his choice is very fortunate. If 
a man is taken with inability to pay, there is another way 
by which you could tide over the trouble; you can take the 
amount of money he has contributed to the company’s reserve fund, 
but not his reserve, and make that the basis of a new policy, dividing 
it up into just as many premiums as you choose, and thus tide him 
over for three or four years, and let him pay his premium in ad¬ 
vance ; it gives him a certain sum of money on his death, and if at 
the end of the time he can pay, and pays up his premium, there is a 
little addition to his policy, and by that means you tide him over. 

Q. If he has taken a paid-up policy, that will not help him ? A. If 
he has, there is the reserve on the paid-up policy, and that may be 
treated the same way as in the othei case; it is a complex problem, 
and yet it may be so worked as to give justice to all concerned; let 
me suggest to you that you do not pass a bill unless you have called 


25 


before you experts whose business it is to know everything about it; 
I shall be very glad, at any time, to come up to Albany and meet 
the committee. 

By Mr. Moak : 

Q. I think you said you became connected with the company in 
1871 ? ^ A. Yes, sir. J 

Q. You were then employed by the company in what capacity? 
A. In my present capacity. 

Q. As actuary ? A. 1 es, sir. 

Q. What was your salary fixed at? A. It was then $12,500. 

Q. And has it been increased since ? A. Yes, sir; it was increased 
the following January to $15,000. 

Q. And has remained so since ? A. Remained so since. 

Q. Are you a member of the board of directors ? A. No, sir ; I 
have nothing to do with them. 

Q. You have no other connection with the company except as act¬ 
uary ? A. That is all, sir. 

Q. Have you attended meetings of the board of trustees ? A. I 
have only been called in to give information in regard to particular 
points, but not to attend the board. 

Q. Have you been present at any of the meetings when the sala¬ 
ries of the officers were acted upon ? A. Never. 

Q. Do you know anything about the fixing of the salaries, or the 
amounts thereof, except what you get from the books of the com¬ 
pany or outside information ? A. Nothing at all. 

Q. You have no personal knowledge upon that subject? A. No 
personal knowledge upon that subject. 

Q. Can you say of your personal knowledge whether any of those 
officers received more than the salary fixed ? A. Not from my per¬ 
sonal knowledge, I cannot. 

Q. You can only speak for yourself? A. Yes, sir. 

Q. And you do not ? A. I have never received one farthing be¬ 
yond my pay; I believe that is the case with all. 

Q. Do you have anything to do with the medical department ? A. 
Nothing, sir. 

Q. Are you consulted when risks are taken ? A. Frecpiently. 

Q. On what particular subject are you consulted when risks are 
taken ? A. With respect to a person whose grandfather or grand¬ 
mother, or aunt, or uncle, or some one else connected with the fam¬ 
ily may have had consumption, what risk would be good for a cer¬ 
tain number of years, or a greater number of years, and what risk 
the company would run upon such a life. 

Q. You are consulted upon the subject whether a person is a 
proper risk ; is that so? A. Yery seldom; it is only in cases of 
doubt, and very seldom then ; not very frecpiently, because the rule 
of the company is to take no unsound lives. 

Q. Have you any personal knowledge, so far as you have been 
called upon in these cases, whether any inducement has been held 
out to the company to take the risks ? A. I have not the least 
knowledge of it. 


26 


Q. You have no knowledge of it ? A. Not the least. 

Q . In no case whatever? A. In no case whatever. 

Q. Now, did you have anything to do, or were you ever consulted 
with reference to the loaning of moneys? A. Never. 

Q. Do you have anything whatever to with it ? A. Nothing what¬ 
ever to do with it at all. 

Q You have no knowledge on the subject of making loans ? A. 
No, sir. 

Q. Nor information ? A. Nor information whatever. 

Q. Now, in reference to this document, has it been marked for 
identification ; this is a report of the company in answer to a reso¬ 
lution of the Senate? A. Yes, sir; and it is addressed by the vice- 
president to the chairman of this committee, explaining the cause 
why the information sought for was not submitted in time. 

By Mr. Wei ant : 

Q. Have you any knowledge as to the correctness of the state¬ 
ments contained in this paper ? A. I have as much knowledge as I 
have on any subject that I did not do. 

Q,. Are you willing to state that you have knowledge of the cor¬ 
rectness of everything stated in the paper ? A. I don’t know what a 
you mean by that. 

Q. Have you read it through ? A. I have read it through, and 
believe the statements are true. 

Q. Can you state that the contents are true of your own knowl¬ 
edge? A. I have as much knowledge of that as I can have of any 
thing, because I have consulted the books and the officers charged 
with the examination of the books. 

By the Chairman : 

Q. There are statements in there in regard to an examination 
pending at the time; you know whether that was so or not ? A. 
Yes; I know that; but in regard to the other I would say that I 
have no actual knowledge. 

By Mr. Weiant : 

Q. I want just an answer directly to the single question whether 
you have knowledge that the statements contained in this report are 
true ? A. Well, I have as much knowledge of that as I have of any 
thing. 

Q. That is not an answer to my question ? A. I don’t know what 
the committee wish me to state; I want to be honest about this 
matter. 

Q. Don’t you. understand this matter? A. Yes; I am afraid I 
do; that is precisely my trouble; I believe that the statement is 
entirely true; and I would predicate any act of mine on it; but to 
assert that I know a thing is to go a great ways ; very few of us 
know any thing, and a great many people nothing. 

Q. That is what I am afraid about these insurance affairs; I think 
that is the trouble; now I offer that question in good faith. I A. I 


27 


believe it to be entirely true from beginning to end, but to swear 
that I know it of my own knowledge to be true might involve con¬ 
siderations that don’t now occur to me ; I don’t intend tobe entrapped 
at all, nor do I intend to attribute to any one the disposition to 
entrap me. 

By the Chairman : 

Q. You mean to say you don’t know, of your own knowledge, 
that all these statements are true? A. No; I don’t know of my own 
knowledge. 

Q. I suppose you do know, of your own knowledge, that there was 
an examination pending at that time ? A. Yes ;; I know that. 

By Mr. Wei ant; 

Q. I would not, under any consideration, ask any question that 
might be deemed impertinent, or by which you might think I 
sought to entrap you; this is a subject upon which I have no 1 
knowledge or information, and that question was asked to get infor¬ 
mation upon certain subjects; I am asking the question in good faith, 
and have no desire to ask any thing improper ? A.. I don’t attribute 
any motive of that sort, and would be very sorry to; I confess to' 
you there would seem to be a doubt implied in the question as to 
whether I had the right to testify to anything in a paper, simply 
because I did not happen to have absolute and perfect knowledge of 
the facts; that is a thing I don’t pretend much to;. I said that the 
paper is true; that is, I know it to be true > as I know any thing, but 
to say I know it of my own knowledge, beyond all peradventure, is 
going too far. 

Q. Now, I want to know whether you know this statement to be 
true of your own knowledge ; that is a plain question ?. A. I don’t 
think I can swear that I know it to be absolutely true.. 

By the Chairman : 

Q. You know certain statements contained in it, as to an exami¬ 
nation being pending by the department, are true? A.. Yes; I 
know of my own knowledge that a great many things stated there 
are true, and infer the other things are true, simply because of my 
intercourse with the office, and seeing things there; I know we have 
been engaged in an examination, and I have been engaged in one 
myself; I infer that the statement is true. 

Q. Now, let me get your idea on the subject, as to whether an 
officer in one company should be permitted also to be an officer in 
another company ; that is, in a life insurance company ? A. That is 
a mere matter of opinion; I have no opinion to express about it. 

Q. What is your idea about it; whether they should be permitted 
to do so in the interests of a successful company % A. I think the 
officers should be confined to a single company;. that is my idea 
about it; but it is only my opinion. 

By Mr. Moak. 

Q. I understood you to say there were 7,501 forfeited policies l 
A. Yes. sir. 


28 


Q. In 1876 ? A. Yes, sir. 

Q. In that do you include this 4,517 that were surrendered ? A. 

Yes, sir. . . 

Q. They are included in this 7,501 ? A. \ es, sir; that is to say, 

those are policies that cease to exist. 

Q. Now, the whole 7,501, can you tell us the aggregate amount of 

insurance which they represent ? A. Yes, sir. 

Q. How much do they represent ? A. Twenty-two millions, six 
hundred and sixty-six thousand and fifty dollars. 

Q. Can you tell us how much the 4,517 policies you called sur¬ 
rendered policies represented ? A. Ho; they are not separate ; they 
are all included in this statement. 

Q. What is the usual rate of compensation paid to agents, in pro¬ 
curing a policy, out of the first premium? A. That is varied at 
different times; thirty per cent. I think is the present amount, with 
six renewals at seven and a-half per cent. 

Q. Then, after that, does the agent’s interest in the premium 
cease entirely? A. Yes—let me make myself understood; that is 
what we pay to the general agents, but the local agents receive their 
compensation from the general agents. 

Q. The company allows the general agent who sends in the insu¬ 
rance, thirty per cent out of the first premium ? A. Yes, sir. 

Q. And then allows him seven and a-half per cent on six subse¬ 
quent renewals. A. That is on life policies. 

Q. And then agent’s interest ceases entirely t ? A. Yes, sir; 
after seven years, but they are allowed a certain per centage for col¬ 
lection ; I think it is two per cent. 

Q. Is that allowed in addition to the seven and a-half per cent ? 
A. Ho, sir ; that is for collecting the money. 

Q. What is the highest amount your company has paid to agents 
for procuring insurance? A. I think the amount I have stated is 
the highest rate ; according to my recollection it is. 

Q. Do your policies usually contain a clause that when the pre¬ 
mium is not paid at the time it is due, that the insured may, within 
thirty days, obtain a paid-up policy on application ? A. Ho, not in 
general; it is not a general term of our policy. 

Q. Then there is nothing in your policy giving the insured the 
right to a paid-up policy it he does not pay up the premium ? A. 
Yes, there is in certain of the ten year policies; our old policies 
gave them the right to demand a paid up policy as many fractional 
portions as the premiums paid might bear to the entire policy. 

Q. That is in the old policies? A. Yes, sir. 

Q. But those of late years do not have it ? A. Ho, sir. 


THE INSURANCE INVESTIGATION. 


Report of the Committee. 


IN ASSEMBLY. 

Friday Evening, April 17 , 1872 . 

To the Honorable Asssembly of the State of New York : 

The resolution of the Assembly passed January 11, 1872, on mo¬ 
tion of Mr. Moulton, recites an extract from the Governor s message 
that there is a popular belief that important legislation has been in¬ 
fluenced by the direct use of money, and that there should be a 
thorough inquiry to ascertain whether it is well founded, and that 
the guilty should be brought to justice under existing laws, or proper 
laws should be passed to meet cases which may hereafter arise; that 
the people demand reform in every department of government, mu¬ 
nicipal, State and Federal, in which abuses may be shown to exist. 
Said resolution also recites that various charges have been made in 
the daily and insurance press and otherwise that the superintendent 
of the insurance department has been and still is (1) receiving fees 
and perquisites for his own personal use and emolument which should 
by law be paid into the State treasury, particularly the one fifth of 
one per cent, chargeable to insurance companies under the supply 
bill of 1870 ; and also, (2) that inordinate and illegal fees have been 
collected by the superintendent for making special and other exam¬ 
inations of insurance companies in this and other States; and also, 
(3) that money has been raised in large amounts in order to pass 
alterations of the insurance laws conferring additional power upon 
the superintendent in the appointment and election of receivers and 
otherwise; and also, (4) that other irregularities have occurred and 
still exist in the administration of the insurance department. Said 
resolution, therefore, authorized, empowered and required the stand¬ 
ing committee on insurance to enquire into, investigate and report 
upon the truth or falsity of the said charges and any others relating 
to the administration of the insurance department in any respect. 

In accordance with the above resolution the insurance committee 
beg leave respectfully to state that the testimony of numerous wit¬ 
nesses has been taken before the committee at Albany, and also a 
sub-committee in the city of New York, in pursuance of a resolution 
of the Assembly; the testimony has also been directed to be printed 
by order or the House. 

The conclusions of the insurance committee in the premises have 
been reached after careful consideration and deliberation, and are 
embodied and set forth in the following 




30 


REPORT. 

I. 

The first specific subject of inquiry and investigation under the 
resolution of the Assembly relates to the one-fifth of one per cent, 
collected by the superintendent on the transfer of the securities un- 

der the clause in the supply bill of 1870. * * , , 

There is no dispute as to the fact of the superintendent s having 
received one-fifth of one per cent, on the transfer or withdrawal ot 
securities, and appropriated the same to his “ personal use. 
proved to have been an open transaction, and an accurate account 
was kept in the department of the amount of fees thus receivec. 
The superintendent claims that the fees thus collected lawfully belong 
to him by way of increase of salary, and that in appiopriating t iem 
to his own use he has violated no law upon the statute books. 

The amount thus collected and retained, by the superintendent 
since the passage of the supply bill in I860, is $4,606.50. 

II. 

The second specific subject of enquiry with which the committee 
have been charged by the resolution of January 11th is as .follows: 

That inordinate and illegal fees have been collected by the super¬ 
intendent for making special and other examinations of insurance 
companies in this and other States. * * * 

Your committee is not aware of any provision of law authorizing 
or allowing of fees for the examinations of companies to the super¬ 
intendent or his deputies. All that they can in any manner be al¬ 
lowed to charge for such examination is .actual travelling expenses 
and board while they are thus engaged. The superintendent and his 
deputies are paid liberal salaries by the State, and any amounts re¬ 
ceived as fees or perquisites must be considered in the nature of ad¬ 
ditional salary, for which there is no authority of law. To admit 
more than this, as the law now stands, would be to give to a State 
officer unlimited authority to exact such fees as his avarice might 
dictate. Neither, in the opinion of your committee, is the superin¬ 
tendent entitled to receive gratuities for services performed in the 
examination of companies, as in the case of the Continental and In¬ 
ternational Fife Insurance Companies, where, for a few hours’ work, 
$500 was paid to the superintendent as a gratuity, no charge having- 
been made. He acts in a judicial capacity, and must, if he properly 
performs the functions of his office, be impartial as between tlm 
companies on the one hand and the policy-holders and the public on 
the other. It is not in human nature to accept gratuities from one 
of the parties in litigation, and’at the same time maintain an atti¬ 
tude of impartiality. Abuses and corruption must necessarily fol¬ 
low such a ; course. 

Has the present superintendent of the insurance department, 
during his incumbency, exceeded the limits we have - here-indicated '\ 


31 


The mere fact of an examination being in progress, or any long 
delay in making a report, after an examination is completed, may in 
some cases sap away the foundation of a company, and if too long 
continued might even destroy its solvency and very existence. * * * 
* .. ^e following table shows the number of examinations made 
of Life Insurance Companies under Superintendent Miller’s admin¬ 
istration : 

LIST OF LIFE INSURANCE COMPANIES EXAMINED EY THE SUPERINTENDENT 


AND COMMISSIONERS IN TIIE STATE OF NEW YORK AND OTHER STATES 

DURING THE YEARS A. 

/ 

Companies. 

D 1870 AND 1871. 

NEW YORK STATE. 

Examiners . 

Paid. 

Paid 

Chisel. 

Mutual Life, 

G. W. Miller, 

$8,000 

Decl’s 

ans. 

Great Western, 

G. W. Miller, 

250 


Knickerbocker. 

G. W. Miller, 

2,750 

$5,000 

Farmers’ A Mechanics’ 
Merchants’ 

G. W. Miller, 

G. W. Miller. 

40 

Standard, 

Southwick A Carr 

300 


Hercules, 

T. R. B. Eld ridge, 

200 


World Mutual, 

Southwick & Eldridge, 

350 


Ashbury, 

Southwick A Eldridge, 

500 


Amicable, 

Southwick A Eldridge, 

200 


Hope, 

Southwick A Carr. 

1,000 


Metropolitan, 

G. W. Miller, 

1,000 

250 

National, 

T. R. B. Eldridge, 


2,500 

New York State, 

W. G. Carr, 

200 


American Popular, 

T. R. B. Eldridge, 

Nothing. 


Mutual Protection, 

Brvant A Southwick 

1,000 

5,000 

British Com., suit, 

Before Judge Cardozo, 


5,000 

Republic, Chicago, 

N. J- Mutual, Newark, 

OTHER STATES. 

H. E. Sickles, 

250 


Southwick A Eldridge, 

400 


Anchor, Jersey City, 

Southwick A Carr, 

500 

1,000 

Total amounts paid for examinations of com¬ 
panies, 

* * * * * 

$12,040 

* 

$19,250 


MUTUAL LIFE INSURANCE COMPANY EXAMINATION. 

This examination was made in reference to certain charges in writ¬ 
ing (ten or more in number) preferred against the officers and trus¬ 
tees of the company by Mr. McCullogh, a policy-holder. 

It was not an official examination, authorized or contemplated by 
the statute for testing the solvency of the company, which w r as ad¬ 
mitted unquestioned. 

It was admitted that the officers and trustees were charged with 
official misconduct. McCullogh appeared to support the charges. 





32 


Mr. Sewell, of the firm of Sewell <fe Pierce, counsellors, &c, appeared 
for the company. No evidence appears upon the record ot the ap 
pearance of Lyon W. Briggs, as counsel for the superintendent, 01 
in any other capacity except as a witness to the deposition of Lucius 
Robinson, at Elmira, New York, in answer to eleven written inter¬ 
rogations. , 

Two stenographers were emplo 3 r ed, one by Mr. McCullogh and 

one by the company. . 

The testimony, however, was not filed by the superintendent with 
his report in the insurance department, but by a resolution of the 
house is now in the possession of the assembly. 

The taking of testimony was commenced on the 21st day of 
March, 1870, and was continued as follows: Commenced March 21, 
1870, continued March 22d, and adjourned to March 20, ISO*, and 
then adjourned to March 28, 1870, continued and adjourned subject 
to notice by the superintendent; commenced again May 4, 1870,. 
continued and adjourned to 1 P. M., May 10, 1870; continued May 
11, 1870; continued May 12, 1870. Thus making portions of eight 
days only occupied in the taking of testimony, viz., four days in 
March and four days in May. Mr. L. W. Briggs does not appear to 
have performed services of any consequence in the examination, be¬ 
yond going to Elmira to take the written deposition of Lucius Rob¬ 
inson in answer to written interrogations, for which and his other 
services he was paid tive hundred dollars by the company. 

Being, therefore, in the pay and employment of the company 
itself, he could not well act in the double capacity of counsel to the 
superintendent also, for which duty it does not appear he had any 
previous education and no particular qualifications. 

It seems to strike the committee also, that no counsel was neces¬ 
sary to be employed by the superintendent, Mr. McCullogh having 
offered to furnish counsel for the prosecution, and the company be¬ 
ing represented by Mr. Sewell, and the superintendent acting in a 
judicial character in the trial of the charges against the company. 

In the opinion of the committee the charge of $2,500 in this ex¬ 
amination, besides $500 to Mr. Briggs, was altogether too large and 
exorbitant, and should have been confined to mere travelling and 
boarding expenses, which could not have much exceeded two hun- 
lmndred and fifty dollars. 

The payment of a judge’s salary or expenses to an unlimited 
amount, by the person on trial, or by one of the litigants before him 
in civil cases, is such a flagrant violation of all principles of public 
policy, as need no further elucidation and explanation, than is embod¬ 
ied in its mere statement. This is especially true in this case, when 
grave charges of official misconduct have been made against the offi¬ 
cers, and these same officers pay the superintendent, not out of their 
own funds, but from those of a corporation, the accumulations of 
which now reach $50,000,000. Is it a matter of astonishment that 
the officers were entirely willing to pay a much heavier sum, if any 
willing recipient could be found ? 

The amount paid to Sewell & Pierce in this connection, the firm 
declined to answer. 


32 a 


* 


Another point to which the committee desire to draw attention is 
the fact testified to by Mr. Briggs, that although he was present dur¬ 
ing the whole examination acting as counsel for the superintendent, 
he was paid $900 for his services in the matter, aside from the $500 
paid by the company, while Mr. Miller was paid for his expenses 
during the same period the sum of $1,600. 

The superintendent did not claim to the committee nor attempt to 
show the employment or payment by him to any other person out of 
this $2,500, any sum whatever except the $900 paid to Briggs, nor 
did he claim or attempt to show that it was necessary or proper to 
have counsel present. * * * 

THE EXAMINATION OF THE MUTUAL PROTECTION LIFE INSURANCE 

COMPANY. 

This company was examined by Southwick and Bryant in the year 
1871. Bryant was at that time a clerk in the department, and paid 
by the State. Mr. Freeman testified in substance that he procured 
the examination through Sewell and Pierce ; that several applications 
were made to the department for an examination which were not 
complied with; that he met Mr. Miller in New York, and accom¬ 
panied him to the office of Messrs. Sewell and Pierce; that Mr. 
Pierce requested him to go into another room ; that shortly after Mr. 
Miller and Mr. Pierce came out together, and Pierce told him in 
Miller’s presence, that the matter was arranged, but that the exami¬ 
nation would cost him $1,000, to the payment of which he then and 
there assented ; that subsequently his company was examined, for 
which he paid $1,000 through Messrs. Sewell and Pierce (now Sen¬ 
ator Pierce). 

It further appears by other testimoney that the $1,000 was paid 
by Mr. Pierce to Southwick, who paid Bryant $lO0and retained the 
balance. 

Mr. Pierce denies that he had the private interview with Mr. 
Miller testified to by Freeman, and also that the amount to be paid 
for the examination was agreed upon in his office, and also denies 
other statements made by Mr. Freeman. 

The examination occupied about a week: the amount charged was 
exorbitant; the president testified that it was worth not to exceed 
$250 to make the examination. The principle that clerks of the de¬ 
partment should be only paid their actual expenses was here recog¬ 
nized, for Bryant only received $100 for expenses, while Southwick 
received the balance, $900. Messrs. Sewell and Pierce had been 
employed by the company for three years to attend to their business 
and legislation, for which they were paid in advance $5,000. * * * 

No third parties or brokers of any kind should be permitted to 
interview or interfere in any manner between the companies and the 
department. 

Your committee do not deem it necessary to advert to all the ex¬ 
aminations made by the superintendent and the commissioners ap¬ 
pointed by him ; but by referring to the testimony it will be seen 
that there are many other cases where exorbitant fees have been 
received by the commissioners, in most of which they refused to take 






32 b 

checks payable to their own order, but required the payment of their 
fees in currency or checks payable in blank. 

III. 

The third subject of inquiry and investigation with which the 
committee were charged by the resolution of January llth, was 
whether money had been raised in large amounts in order to pass 
alterations of the insurance laws conferring additional powers upon 
the superintendent in the appointment and selection of receivers, and 
otherwise. 

THE “ MILLER ” LIFE BILL. 

This bill seems to have been drawn by the superintendent, after 
consultation with the representatives of several of the large insurance 
corporations. At least these companies approved of its provisions. 
This bill enlarged the powers of the superintendent, and was evi¬ 
dently to the interest of the large and well-established companies. 

To pass the bill, it is in evidence, that a fund of $20,000 was con¬ 
tributed by seven of the leading insurance companies in New York. 
Mr. James H. Goodsell seems to have been the active agent to dis¬ 
pense this amount at Albany, where he spent several months of the 
session, and in his efforts seems to have had the co-operation of Mr. 
Miller, in appearing before the committees and in other ways. 

The Mutual Life contributed $3,500 of this fund, inclosing a 
check to Mr. Miller, directing him to use the same in “ such legiti¬ 
mate and proper way as your judgment may direct.” Mr. Miller 
cashed the check and paid the same over to Goodsell, as testified to 
by the latter, who was also the custodian of the balance of the 
$ 20 , 000 . 

It does not appear from the evidence who were the recipients of 
this large amount after it went into the hands of Goodsell, or in 
what specific manner it was employed. It is, perhaps, sufficient to 
know, as we do know from the sworn testimony, that this money 
was contributed by the large companies to influence legislation on 
this bill, and that the superintendent was privy to the fact of its 
being used. 

There was no lack of opportunity for the defense to show that the 
amount was legitimately expended if such was the case. 

But no attempt was made to account for the same, whether dis¬ 
bursed in a legitimate manner or otherwise, and the conclusion can¬ 
not be avoided that the parties concerned in this transaction were 
guilty of a gross perversion of trust. 

The people’s money was being used for illegal purposes, and the 
fountains of law corrupted for selfish ends. 

Facts disclosed by this investigation in relation to the prodigal 
and extravagant, not to say criminal, use of money in large amounts 
by many of the companies to secure selfish ends, are so manifest, 
that your committee feel that they would come far short of per¬ 
forming their duty if they fail to condemn in the most positive 
manner the practice which has been pursued by them. 

The extravagance of the superintendent, in the matter of the ex¬ 
amination of companies, has been fully supplemented, if not directly 


32 c 


encouraged, by the companies themselves. And your committee feel 
bound in candor to state, that the evidence in this case has failed to 
sustain the charge that the superintendent has extorted money, 
except inferentially, from the companies in the examinations which 
he has instituted or made. 

In the cases of the Mutual Life, the International, the Continental 
and several others, the witnesses testify that they not only paid the 
amounts freely, but urged the superintendent and his examiners to 
accept larger sums. 

The officers and managers of these companies seem, in the minds 
of your committee, to have willfully misconceived the purposes of 
insurance. The law by which they were organized, and the confi¬ 
dence reposed in them by the insured, supposes that the affairs of 
the companies will be administered by their officers and directors, 
not for selfish purposes, but in the interest of the policy-holders and 
the public. Theirs is a sacred trust. Widows and orphans are de¬ 
pendent upon these institutions for the means of support. And 
property owners otherwise bankrupted by unavoidable calamity, rely 
upon them for the means wherewith to rebuild their broken 
fortunes ; and the insurance interests of the country are now so vast 
that the welfare of society itself is dependent, to a serious extent, 
upon an honest and economical management of these corporations. 

Liberality is best exemplified when we expend or bestow that 
which we ourselves possess, and not that which we hold in trust from 
others for safe keeping and profitable investment. The prodigality 
of many of the companies in proffering large fees for examination.-, 
in expending large sums for “counsel ” and upon outside parties in 
the performance of doubtful and unwarrantable services, and in con¬ 
tributing to large funds, as in the case of the “ Miller Life Bill," by 
which to secure unwise and injurious legislation and to corrupt legis¬ 
lators, should receive the most emphatic condemnation. Your com¬ 
mittee believes that at no time since the insurance department was 
organized has it been necessary to use money to secure the passage 
of just and proper laws to further the best interests of insurance, 
whose humane purposes when rightly carried out commend it to the 
good will of all. The fact that such large sums have been thus used 
in an illegal manner, discloses not only corrupt and selfish motives, 
but an abuse of the various trusts reposed, which must sooner or 
later destroy all confidence, and effect the overthrow of the entire 
insurance interest as at present administered. 

In some instances insurance officers are believed to receive a salary 
equal to that of the President of the United States. This comes 
directly from the people. And the people ask in return fidelity,econ¬ 
omy, and honest management. 

IV. 

T1 ie fourth subject of investigation with which the committee 
were charged was to ascertain whether any other irregularities have 
occurred and still exist in the administration of the insurance de¬ 
partment. 

Evidence has been taken upon several points which are hereinafter 
mentioned: * * * 


THE TWENTY-FIVE 


>EK CENT. COMMISSION ON 
PARTMENT PRINTING. 


THE 


INSURANCE DE- 


The printing of the insurance department during the administra¬ 
tion of the predecessor of Mr. Miller had been done by Messrs. 
Weed. Parsons & Go., a well-known Republican firm, residing in the 
city of Albany. 

Mr. John I). Parsons of that’firm was before your committee on 
three several occasions. From his evidence it appears he was con¬ 
sulted by one Henry 0. South wick, a clerk in the canal department, 
having no connection with either the printing or insurance depait- 
ments, who informed him that, in order to retain the department 
printing, he would have to pay a percentage or commission there¬ 
for. 

After some considerable negotiation the rate of commission was 
fixed at twenty-five per cent., of which Southwick informed Parsons 
twenty per cent, would go to Miller, and five per cent, would be re¬ 
tained by him for his services in the matter. 

Southwick in pursuance of this arrangement came to Parsons, got 
the bills, took them to Miller, had them certified, and then informed 
Parsons, wdio usually called upon Miller and received the certified 
bills, although in some instances, where the bills had been mislaid or 
lost by Miller, new bills were made out by Parsons, and certified by 
Miller, who delivered them to Parsons, who drew the money thereon 
and paid twenty-five per cent, thereof to Southwick. 

There has been paid to Southwick, under this arrangement, 
14,542.25, and there is still a considerable amount his due. 

Your committee have been unable to obtain the testimony of 
Southwick, he having left the State about the time this investigation 
was ordered. There is no direct testimony showing Miller received 
any portion of this commission, but the circumstantial evidence, in 
the opinion of your committee, tends to show that in this transaction 
Southwick acted as the agent of Miller, and that Millei did in fact 
receive twenty per cent, of the commisson paid by Weed, Parsons 
& Co., upon the printing. The facts disclosed tend to show con¬ 
nection between Miller and Southwick, and called upon Mr. Miller 
to take the stand and deny the connection or the receipt of any per¬ 
centage upon this printing ; this he failed to do. 

THE DIVERSION OF THE FUNDS OF THE DEPARTMENT THAT SHOULD 
HAVE BEEN PAID INTO THE STATE TREASURY. 

In the year 1870, the superintendent, instead of paying into the 
State treasury the fees collected by him, opened an account in the 
Albany City National Bank, and deposited ihere to his credit as su¬ 
perintendent, from time to time, the sum of $46,863.99. On the 
third day of May, 1870, he drew from said bank and deposited in 
the bank of Monroe, located in the city of Rochester, the sum of 
$15,000, and on the twenty-first day of June, the further sum of 
$10,000, and the same remained in said banks and said banks had 
the use thereof till on or about the first day of October, 1870, when 
the same was paid by said Miller into the State treasury. 


32 e 

In the year 1871, the said superintendent deposited in like man¬ 
ner, the fees collected by him between the 1st day of October, 1870, 
and 1st of October, 1871, amounting to the sum of $85,703.63, in 
the National State flank, and located in the city of Albany. On the 
17th day of February, 1871, he drew from said bank, and sent to 
said Bank of Monroe, the sum of $10,000. And on the 29th day 
of April, the further sum of $15,000; and on the 13th day of June 
the further sum of $20,000, making in all the sum of $15,000. And 
said bank had the use of the whole of said money from the time the 
same were paid in until on or about the first day of October, 1871, 
when the same were paid over by said superintendent to the State 
treasury. The State by reason of the money being withheld from 
the State treasury was obliged to, and did, advance and pay the sal¬ 
aries and other expenses of the superintendent, and for various pur¬ 
poses, was obliged to and did borrow large sums of money, for which 
the State had to p \y interest. 

There was al o an arrangement with the banks in which the State 
received interest on all the balances belonging to the State on de¬ 
posit in the banks in which it was kept, the rate being three and 
four per cent, on daily balances, depending upon the time for which 
it was deposited. 

The banks in which these deposits were made, were controlled by 
intimate personal and political friends of .the superintendent. 

It cannot be claimed that there is any law justifying such a trans¬ 
action. 

In conclusion, your committee desire to say that to their minds it 
has been proved, among other things, to their entire satisfaction, 

First , That the said superintendent has received and appropriated 
to his own use the fee of one-fifth of one per cent, on transfer of 
securities which he claims he is legally entitled to. 

Second. That he has without authority of law, received, and in 
some cases charged for his own use, sums largely in excess of his 
legitimate expenses in making special and other examinations of 
companies, and that he has likewise received large sums in payment 
for his services in making such examinations. 

Third. That lie has allowed clerks in the department who are paid 
regular salaries by the State to charge and receive illegal and exces¬ 
sive fees for making special and other examinations. 

Fourth. That he has appointed commissioners to make examina¬ 
tions who have received large and excessive fees, entailing great 
expense upon the companies. 

Fifth. That the department has been so managed that many of 
the companies have believed it necessary to employ brokers and 
attorneys who were known to be on intimate terms and favorites 
with the superintendent, to obtain examinations and protect the in¬ 
terests of their companies, and the payment of large sums for their 
personal interest in that behalf. 

Sixth. That the testimony tends to show that he has received 
through FI. C. South wick, Jr., a commission of twenty per cent, on 
the printing of the insurance department. 

Seventh. That he has withheld from the State treasury the fees 


belonging to the department and which should have been paid into 
the State treasury within a resonable time. 

Eighth. That $20,000 was raised by seven companies for improper 
legislative purposes last winter to secure the passage of wl)at was 
known as the “Miller Life Act,-’ a bill conferring extraordinary 
powers upon the superintendent, and that the superintendent was 
cognizant of the use thereof. 

The evidence herewith presented is voluminous and instructive in 
more points than one. 

Your committee have herein fully expressed their opinions upon 
the various points of this investigation without prejudice against 
the superintendent, and yet with a desire fully and fairly to repre¬ 
sent the testimony. 

Possibly different individuals, equally honest, may arrive at diffe¬ 
rent conclusions. 

The laws in relation to examinations of insurance companies are 
very lax, and abuses have grown up under them, which the legisla¬ 
ture should at once correct by the passage of adequate and stringent 
laws, as suggested in the body of this report. Whether the superin¬ 
tendent has been guilty of intentional violation of law, and whether 
or not he should be removed from office, are questions which we will 
leave to the consideration and wisdom of the House. 

All of which is respectfully submitted. 


J. VY. Lippitt, Chairman. 
W. H. Enos. 

T. IL Babcock. 

A. L. Yan Dltzen. 

F. W. Tobey, 


EXTRAORDINARY DISCLOSURES ON OATH. 


THE WINSTON-ENGLISH SUIT. 


THE ASSEMBLY COMMITTEE S INVESTIGATION CONTINUED. 

Albany, H. Y., April 23d, 1873. 

The Assembly Committee on Grievances resumed their investiga¬ 
tion into the management of the Mutual Life by the officers and a 
clique of the Trustees as set forth in the allegations of Stephen Eng¬ 
lish, by petition presented to the Assembly of the State of JSTew 
York. 

Present—The Hon. C. W. Herrick, Chairman, E. Townsend, A. 
Blessing, and Frank Abbott, J. Thomas Davis, clerk, and O. T. At¬ 
wood, Counsel to Committee. Thomas Darlington, Esq., appeared 
for Mr. English. 

The Hon. James M. Husted, appeared before the Committee and 
made a statement, but declined to be sworn, asserting that.a member 
of the Assembly was always taken as a man of honor (laughter). Mr. 
Husted denied having received $500 for making a speech at the 
Board of Brokers in favor of Mr. Winston. He had been employ¬ 
ed by the Counsel of the Mutual Life as associate counsel in two 
cases, for which he received a retainer as lawyer. 

Hon. Franklin W. Tobey, Chairman of the Insurance Commit¬ 
tee, sworn, stated that last year he was chairman of a sub-committee 
to investigate certain charges against Geo. W. Miller, the Superin¬ 
tendent of the Insurance Department, under a resolution of the As¬ 
sembly, passed on the 11th of January, 1872. On the 17th of Feb¬ 
ruary, 1872, Mr. Lippit made a motion in reference to Mr. Miller, 
that he should tile the testimony which he had taken in his investi¬ 
gation into the management of the Mutual Life by F. S. Winston 
and Richard A. McCurdy, Another resolution was made by Mr. 
Lippit, on the 29th of February, which recites the communication 
from Superintendent Miller, in which he respectfully or rather dis¬ 
respectfully declined to file the testimony taken against the officers 
of the Mutual Life. On the 2d of March the testimony was sent in 
as appears by the Assembly Journal Vol. 1. We made enquiry in 
reference to moneys appropriated by Life Insurance Companies for 
the purpose of affecting the Legislature in their action upon certain 
bills. Twenty thousand dollars was contributed by seven of the 
leading companies of Hew York. The Mutual Life contributed 
$3,500 of this fund. Mr. English appeared at the investigation and 
assisted Mr. Barnes in getting out the facts. Mr. Winston w r as in 
Europe at the time. There was a good deal of feeling displayed in 
the examination and excitement in regard to it in Insurance circles. 
Fart of the testimony in the Miller trial read as follows: 




•32 31 


EVIDENCE OF JOHN M. STUART. 

John M. Stuart. —Secretary of the Mutual Life testified that 
produced a copy of the cheek, No. 11,856, on the Bank of -New 
York, for $3,500, but cannot specify the purpose for which it was 
drawn, any more than is specified in the stub. It was charged to tax 
account. The writing on the stub is in my handwriting. The $2,500 
paid to Miller for the examination was also paid by check.” 

EVIDENCE OF RICHARD A. MCCURDY. 

“ Richard A. McCurdy , Vice-President, testified that he held the 
position between seven and eight years. An examination was made 
by Mr. Miller into the affairs of our company in the winter (spring), 
of 1870. It occupied over three months, two or three days every 
week. (The examination took only portions of eight days. We 
paid Mr. Miller for making this examination, $2,500 ; thought the 
charge was very moderate and asked him to make out a bill for a 
larger amount , but he declined. Messrs. Sewell and Pierce were 
counsel employed by us, they were our regular counsel. Mr. Pierce 
was then in the Legislature. The Mutual Life did not to my knowl¬ 
edge pay anything to the Deputy Attorney-General for anything 
-connected with that examination. 1 can swear no such payments were 
made by the company. 

“ Chairman. —Could you say there were no payments made by 
Sewell & Pierce to the Attorney-General’s office ? 

“ McCurdy.— I don’t know anything about Sewell de Pierce’s ar¬ 
rangements. 

u Chairman. —When was that bill made out \ 

“ McCurdy. —My impression is, it was made out at the time of its 
payment in the office. 

“ Chairman. —What was that check for $3,500 paid for ? 

“ Ale Curdy . —That check was paid for the purpose of presenting 
properly before the minds of members of the Legislature and other 
persons, the advantages of the bill then before the Legislature. Mr. 
Winston favored the passage of the bill. I knew that we paid the 
$3,500. I directed the Secretary to draw the check by Winston’s 
orders. Mr. Winston came into my room on one occasion with 
another gentleman and commenced to talk about certain measures 
that were before the Legislature. Mr. Winston assented to a pay¬ 
ment of $3,500 and after the person (James H. Goodsell), went out 
of the room, he said to me. I don’t know him (Jas. H. Goodsell), 
very well, I don’t think we had better make that check payable to 
his order, I have not met him but once or twice before, and I had 
rather make it payable to the order of somebody that I know, and 
for that reason it was made payable to your (Miller) order. 

“ Mr. Miller —It was the understanding between you and me 
that it was to be used for proper and legitimate purpose of present¬ 
ing to the minds of the Legislature and Committee in both houses 
•thereof, the merits of the bill, with a view to secure its passage. 

4< McCurdy — Precisely. 

•“ Mr. Miller.—Look at that letter I show you. 


“ McCurdy. — This is Winston’s hand-writing. 

“ Miller. —Is that a letter appropriate to cover that check ?• 

“ McCurdy .—I have no doubt of it. It is of the- same date.- 
Head. 

“ Office of the Mittl t al Life In¬ 
surance Company, 

New York , March 13th, 1871. 

“Geo. W. Miller, Superintendent: 

“Dear Sir: —We send our check for $3,500 to be expended in 
such legitimate and proper way as your judgment may direct. 

Very respectfully yours, 

F. S. Winston, President 

-x* -x -x- -x- -X- 

Evidence of O. II. Palmer for Defence. 

Mr. Darlington. —Were the charges against Mr. Homans ever 
served upon him ? 

Mr. Palmer. —I am not aware of the service of any charges* 
sensation), except as embraced in a letter I addressed to him. 

Mr. Darlington. —Was there a meeting of the committee at which 
he was invited to be present? 

Mr. Palmer. —Not that I am aware of (sensation). 

Mr. Darlington —Was he ever allowed to produce witnesses be¬ 
fore the committee ? 

Mr. Palmer. —I not aware that he ever asked permission^ The 
question was never up before the committee that I am aware of. 

Mr. Darlington . —Did the Special Committee ever have a con¬ 
ference with Mr. Homans on the charges, or afford him a personal 
explanation ? 

Mr. Palmer. —I don’t think he was ever before the committee. 

Mr. Darlington. —Was he ever invited to attend the Committee ?• 

Mr. Palmer. —Not that I am aware of. Mr. Winston in the first 
place called the attention of the Finance Committee. We made a 
report, Mr. Homans not being called before us. * * 

Mr. Dai'lington. —At whose expense was this book printed ? 

Mr. Palmer. —I asked the company to have it printed, for the 
purpose of laying the facts before the committee, of which I was 
chairman. 

Mr. Darlington. —Printed with the money of the policy-hold¬ 
ers ? 

Mr. Palmer. —I don’t know anything about that. 

Mr. Darlington. —Do you call this ex-parte examination proofs 
of testimony ? 

Mr. Palmer. —It was the facts I gathered.- * * * 

Examination of Lewis C- Lawtonfor Defence.. 

Lewis C. Lawton — Assistant Actuary of the Mutual Life since 
1866, testified as to the practice of the company relative to post¬ 
mortem dividends, although not familiar with the method of deter¬ 
mining post-mortem dividends until Prof. Bartlett came in. Could 
not tell who determined them. It must be somebody in* the office.- 


321 


Hopkins' case was.finally adjusted at about $40. The amount Mr. 
Winston ordered not to be paid was $123. The $40 has never been 
paid. Mr. Homans was appointed guardian for the minor children. 
Heitlier any of the clerks or I had any difficulty in working out the 
formulas furnished by Mr. Homans. 

Mr. Sewell. —Did not the Committee tell you that they were obli¬ 
ged to call upon you, because they could get no information from 
Mr. Homans ? 

Mr. Darlington. —I submit that instead of investigating Mr. 
Winston, we are now about investigating Mr. Homans. 

Sewell —We don’t know who will get investigated before we get 
. through (laughter). 

Darlington —The witness is asked if some of the committee 
didn’t tell him that they couldn’t get information from Mr. Homans, 
would that prove that Mr. Winston had or had not mal-appropriated 
funds ? 

Chairman. —You are diverging from the real question; you must 
dispense with that part of it. Mr. Bewley’s policy bore Mr. Ho¬ 
man’s endorsement. 

CROSS-EXAMINED BY MR. DARLINGTON. 

Darlington. —In the computation which Mr. Homans made on 
Hopkins* post-mortem dividend, was it in accordance with the forms 
adopted by the company ? 

Lawton. —Yes, sir ; so far as I know. 

Darlington. —Who set aside that calculation ? Who directed you 
not to pay it ? 

Lawton. —President Winston. 

Darlington. —At that time was there any rules, regulation or by¬ 
law of the company, which had repealed the former regulation in 
regard to it? 

Lawton. —Ho, there was not. 

Darlington.— I believe you once audited the accounts, did you 
not ? 

Lawton. —I once audited the quarterly accounts.* 

Darlington. —Did you go over the items? 

Lawton. —All of them from the ledger. 

Darlington. Did you know T that the items were correct or that 
they were merely transcribed from the books ? 

Lawton— That they were correctly transcribed ; that is all I had 
to do with it (sensation). 

Darlington. —What was the form of your audit? 

Lawton .— u That L have carefully examined the foreaoina state¬ 
ment and Jmd the same corrects U y 

Darlington .—You don’t say, “ correct transcript from the ledger ” 
do you ? to ’ 

Lawton .—Ho, sir. 

Darlington.— Didn't you know that Mr. Homans had refused to 
audit that account ? 

Lawton .—I think*! did. 

Mi 


Darlington. —Do you know whether the $2,250 mentioned in 
that account as paid for rent of the Boston office was so paid ? 

Lawton. —I had no personal knowledge about the payment. I 
didn't pay the money over. I didn’t see any receipt for it, or have 
anything to do with it. 

Darlington. —Then you audited that without knowing whether it 
was correct or not ? 

Lawton. —I had every reason to believe that a charge made upon 
the books for a sum of that kind was right. 

Mr. Darlington. —Do you know whether the company had in- 
•curred any liability for any Boston office, or for rent of aiiy Boston 
office % 

Mr. Lawton. — No, sir. 

SHEPPARD HOMANS. 

Sheppard Homans. —I asked to be allowed to address you, as a 
question of privilege simply, and not as a witness. I was subpcened 
here on two or three occasions, and attended, and answered the ques¬ 
tions put to me, and gave my evidence in as fair and straightfor¬ 
ward a way ns I knew how. * * * The cause of my removal 

from the company, the direct cause, was my refusal to audit an 
account, which I thought was incorrect, and which any honest audi¬ 
tor would say was incorrect. There were false statements in it , 
that led to an investigation of the dividend system of the Company. 
I have given my evidence in that respect. After the Company had 
made this fearful blunder, it was taken out of my hands entirely. 
They made a fearful blunder, and violated the Charter, and all prin¬ 
ciples of equity, and violated the resolution of the Board of Trustees 
and of the Referees, who were appointed to decide the matter finally, 
and ’twas taken out of my hands. Thev made a fearful blunder, 
which has been corrected by the payment of Two Millions of dol¬ 
lars within a few months to rectify that blunder !! I have the most 
ample evidence that I protested at the time, and I was not fespon- 
sible for it; and I repeatedly offered proof to show that I was a 
faithful and efficient officer, and faithful in all my duties. * * * 

Mr. Abbott. —What was this mistake that cost them Two Millions 
of Dollars to rectify ? 

Air. ILomans. —It, was by distributing the surplus of the Com¬ 
pany, in violation of the resolution of the Trustees, and the decision 
of the Referees, to whom it was submitted for final decision. * * 

What I complain of is, that the affairs of the Mutual Life are kept 
from the trustees ! ! Mr. Vice President McCurdy keeps the min¬ 
utes, and I say that in reference to the Insurance Committee, about 
which I had most knowledge, that it was manipulamed in such a 

MANNER THAT THEY COURT) NOT KNOW THE TRUTH OF THE MATTERS BE¬ 
FORE them ! They were kept from them and mis-stated, time and 
again! What that Company wants is a fair and full investigation, 
by disinterested persons on those allegations. I have made them in 
my official capacity, as Actuary, and they have been investigated, 
and the facts have been proved. They have been condoned and 
covered up. 


32 1 


Mr. Blessing. —What do you mean by condoned ? 

Mr. Homans. —I mean they have been covered up and concealed, 
on the ground that their exposure and ventilation would do some 
harm—the investigation of the Hudson loan, the Seymour and 
North loan, and young Winston’s policies, and other matters. 

The manner of maki wg post-mortem dividends was one among them. 
They must be paid. There is no getting out of it. Mr. Winston 
caused to be written, and gave the order, that in future no post¬ 
mortem dividends should be paid to any one by the company. There 
was the order! It was my duty fcr fifteen years to audit the re¬ 
ceipts and payments of money. Here was an accovfnt which I said, 
was wrong. I tried to object to it in the manner least calculated to 
make any trouble or friction, and all resulted from that. * * 

It is now the rule of the Mutual life, and they have had to gO' 
back to the system which they abandoned and departed from, to the 
injury of the policy-holders, and at a great expense, solely to protect 
Mr. Winston from the consequences of his illegal order. I have the 
most ample proof. Two Million Dollars have been paid to correct 
the error! 

Mr. Sewell. —Do you mean to say that in the distribution of a 
new dividend to the amount of $2,000,000, errors in the distribution 
of a prior dividend have been corrected ? 

Mr. Homans. —Not at all. I mean apart from the distribution of 
the surplus, they appropriated and paid $2,000,000 besides, out of 
the surplus, to correct the errors of the former distribution, to make 
amends for the erroneous distribution three years ago. I mean to 
say that they have been obliged to appropriate $2,000,000 to correct 
this particular blunder, which Mr. Winston made in defiance of the 
rules of the Trustees and the resolution of the Referees. Some of 
the parties had died in the meantime, and have not received their 
shares. 

Lewis G. Lawton, re called for the defence. 

Mr. L,awton testiOed that in the dividend of January, 1870, an , 
error was committed, by which policies dated in February, for ex¬ 
ample, received very large sums, too much perhaps, while policies 
dated in December received nothing, or very little. In order to cor¬ 
rect that, the trustees ordered immediately that a sum be appropri¬ 
ated to adjust all such inaccuracies. There was no time to do it in 
1870. In 1871 Prof. Bartlett was instructed to rectify the error, but 
we were not able to send out the certificates of surplus rectifying 
these errors until 1872. About two million dollars .were required to 
rectify the error of 1870. 

Chairman .—To comply with the Charter. 

Mr. Darlington. —Is that Mr. McCurdy’s handwriting, if so, 
read it. 

Lawton. —It is. “ The following minute is made at the request of 
the Actuary (Mr. Homans).” ‘-The Actuary deems it his duty to 
dissent from the action of the Committee, directing an addition of 
80 per cent, to the contribution as first reported, as being incorrect 
in principle, and in his opinion deranging the equities of policy¬ 
holders.” 


32 m 


Darlington .—That minute refers to this dividend which was sub¬ 
sequently rectified at a cost of two million dollars. 

Lawton. —I have no doubt of it. 

Darlington. —I produce a copy of a long letter from Mr. Homans 
to Mr. Winston, explaining scientifically the grounds upon which he 
objected to the addition of 86 per cent, to the dividends. 

EVIDENCE OF RICHARD A. MCCURDY, FOR DEFENCE. 

Richard, A. McCurdy , the Vice-President of the Mutual Life, 
testified that he brought the subject of Fred. M. Winston’s policies 
before the Committee, whilst Mr. Winston was at the funeral. The 
question of the amount of his policies was not raised. I didn’t 
know at the time. It was only resolved that his policies, whatever 
they were, should be revived in favor of his orphan children, and 
paid to them in the form of an instalment * * * I knew 

nothing about the Husted loan, or the loans to Seymour and North. 
With regard to the 80 per cent, dividend characterized by Mr. Ho¬ 
mans “ as the most extraordinary division of surplus ever made,” 
there had been a grave difference of opinion between Mr. Homans 
and the officers of the Company, especially the trustees, who were 
veiy obstinate men, and did not quite agree with Mr. Homans. The 
practical result with regard to that 80 per cent., however, was that 
the dividend to the policy-holders was delayed for some months, and 
gave great dissatisfaction to agents and all parties. There was cer¬ 
tain dissatisfaction about Mr. Homans. 

Homans. —Did I ever see that pamphlet % 

McCurdy. —No, sir; because you resigned before the matter was 
completed (sensation). * * * 

Sewell. —Do .you hold some proxies ? 

McCurdy. —I hold some proxies; they have been sent to me vol¬ 
untarily (sensation). I agreed to put Mr. Homans on the Board of 
Trustees and cast some proxies for him. 

Homans. —Did you do it ? 

McCurdy. —I would have done it if you had not written me a 
letter. I told you that I would carry out my bargain if I lost my 
place in the company. • 

Homans —I deny ever making a bargain with you. 

McCurdy. —The $2,500 for Boston office rent was paid to the 
lawful Boston agent (sensation). Mr. McCurdy entered fully into 
the Bradford policy job, but could not tell the number of proxies he 
Held. He never counted them and never intended. 


A PROMISE NOT FULFILLED. 

Mr. Richard A. McCurdy, in his testimony (see page 328), 
concerning the taking of bonuses by the officers or trustees, testifies 
as follows: 

By Mr. Moody : 

Q. Have you within the last five years to your knowledge, re¬ 
ceived directly or indirectly from any person or corporation, or has 



32 n 


jour president to jour knowledge or information received anj sum 
of money either directlj or indirectlj for the loan or deposit of the 
bonds, or securitj, or assets of the insurance companj ? 

A.. Never. 

Q. Neither has there been anj profits received bj jou or anj offi¬ 
cer of the companj, for the investments of the funds of the corpor¬ 
ation ? 

A. Not one penny; if there were, and it should be known, anj 
such officer would loose his place immediately. 

A few days after this testimony was given the publisher of this 
work made known to Mr. McCurdy the facts contained in the fol¬ 
lowing affidavit. There has been no removal. 

[ This is a copy handed to the publisher .] 

CAYUGA COUNTY, ss.: 

Samuel B. Tobey, of the town of Conquest, county aforesaid, and 
State of New York, being duly sworn, deposes, and says, that there 
is now r pending and undetermined before the Honorable Sterling C. 
Hadley, .Referee, an action in the Supreme Court of the State of 
New York, brought by The Mutual Life Insurance Company of 
New York, against William Penn Howland and others, for the fore¬ 
closure of a certain mortgage originally amounting to $100,000. 
The facts of the case as appear in evidence by the testimony of the 
defendants are as follows. In the month of October, 1857, said de¬ 
fendant, William Penn Howland, made application to Oliver H. 
Palmer, then a trustee of said Mutual Life Insurance Company, for 
a loan of $100,000, on about four thousand acres of land in Cayuga 
county, said loan was obtained by said Howland on these conditions, 
namely, the execution of a second mortgage, on said premises, for 
$20,000, to Hiram Libley, of Rochester, one-half interest of said 
second mortgage being soon thereafter assigned to said Palmer, trus¬ 
tee as aforesaid ; also the payment to said Palmer by said William 
Penn Howland, of one thousand dollars in cash, said conditions 
were fulfilled, and the loan obtained, and said deponent, Samuel B. 
Tobey, further says that the said defendants, William Penn How¬ 
land, and others, contest the foreclosure of said mortgage, by a de¬ 
fense of usury, and said action is as this deponent verily believes, 
yet undetermined, and deponent further says, that L. & D. C. Rob¬ 
inson, of Elmira, N. Y, appear as counsel for the plaintiff, and H. 
Y. Howland, Esq., of Port Byron, N. Y., as counsel for defend¬ 
ants, William Penn and Cornelia Howland, and Samuel B. Tobey, 
and D. D. Walworth, of Chittenange, N. Y., of counsel for S. F. 
Tyler. 

(Signed) SAMUEL B. TOBEY. 

Sworn to and subscribed before me this 8th day of September \ 
D., 1873. 

(Signed) J. W. BARNES, Notary Public, 


The Report of the Examination , by the Insurance Department , of 
the Washington Life Insurance Company of New York .— 
Cyrus Curtiss , President. 


Insurance Department, ) 

Albany, January 23 d, 1877. f 

To the Editors of the Evening Journal'. 

Having caused a personal examination to be made of the condition 
and affairs of the Washington Life Insurance Company of New 
York, as of the 31st day of December, 1876, by Hon. John A. Mc¬ 
Call, Jr., Deputy Superintendent, duly appointed by me for that 
purpose, and deeming it for the public interests that the result of his 
investigation should be published, I herewith enclose his report for 
publication. 

Very respectfully yours, 

W. SMYTH, 

Acting Superintendent. 


r 


Albany, January 23 d, 1877. 

lion. William Smyth, Act. Supt. New York Insurance Depart¬ 
ment : 

I respectfully report that, in accordance with the provisions con¬ 
tained in your appointment, No. 362, dated December 26th, 1876, 
and with the assistance of Messrs. Ballard, Willis and W. IT. Smyth, 
I have completed an examination of the Washington Life Insurance 
Company of New York City. 

The very satisfactory condition of the Company, as exhibited be¬ 
low, is attributable to the management of its affairs by able, prudent 
and honorable men. It gives me pleasure to state that in a minute 
and exacting investigation I find nothing to condemn, but, on the 
contrarv, much to commend. 

Complete schedules of mortgages, deferred premiums, and real 
estate investments as of December 31st, 1876, being the date of ex¬ 
amination, have been placed on file in the department. 



32 * 


The following are the assets and liabilities: 


Assets. 

Real Estate, - 
Bonds and Mortgages, 

Cash in Bank and Office, 

Accrued Interest on Investments, 

Loans on Policies within their value, 

Net Uncollected and Deferred Premiums, 
Stocks and Bonds. Par Value. 


$159,284 80 
- 2,334,252 79 

116,654 18 
53,071 26 
19,109 46 
180,429 95 

Market Value. 


U. S. 6’s, Registered, $510,000 00 
N.Y. State 7\s, Registered 100,000 00 
N. Y. City 7 , s, Registered 990,000 00 
N. Y. City 5’s, Registered 122,200 00 
Brooklyn 7’s, Registered 260,000 00 
Brooklyn 6’s, Registered 100,000 00 
Kingston City Coupon 

Bonds, - - 11,000 00 


$581,400 00 
100,000 00 
1,138,500 00 
122,200 00 
299,000 00 
107,000 00 

11,000 00 


Agents' balances, 


$2,093,200 00 $2,359,100 00 




2,359,100 00 
- 43,592 92 


Total Assets, - - - $5,265,495 36 

Deduct items not admitted : 

Morgages taken for debt, - $10,838 81 

Value of Real Estate over Depart¬ 
ment Appraisal, - - 37,784 80 

Agents’ balances, - 43,592 92 



92,216 53 

Total admitted Assets, 

$5,173,278 83 

Liabilities . 


Net Value of Outstanding Policies, 

Unpaid Losses and Endowments not due, 

Premiums Paid in Advance, 

Unpaid Dividends to Stockholders, - 
Salaries, Rent, Ac., - 

$4,337,644 00 
43,306 82 
2,388 51 
346 50 
3,DUO 00 

Total Liabilities as to Policyholders, 
Surplus as regards Policyholders, 

$4,386,685 83 
786,593 00 

Aggregate, 

*5,173,278 83 

Capital Stock, - 

$125,000 00 


Respectfully submitted, 

JOHN A. McCALL, Jr., 

Deputy Sujyt. 
















32 3 


THE OFFICIAL STATEMENT 

OF THE 

NEW YORK STATE INSURANCE DEPARTMENT 

OF THE 

GERMANIA LIFE INSURANCE COMPANY. 

LOCATED IN NEW YORK CITY. 

[Organized July 16, I860.] 

Hugo Wesendonok, President. Cornelius Doremus, Secretary . 


I. CAPITAL. 

Capital stock paid, $200,000. 


II. INCOME DURING 1876. 

Cash received for premiums, without deductions . . . $1,394,598 90 

Cash received for annuities, ...... 478 40 


Total premium income . 

Interest upon mortgage loans 
Interest on bonds and dividends on stock 
Discount on claims paid in advance 
Rents for use of company’s property 
Policies fees . 


. $1,395,077 33 

377,620 37 
. 55,212 01 

184 35 
3,854 18 
222 32 


Total income during the year 


$1,832,170 53 


Balance of net or ledger assets December 31,1876 


6,824,635 41 


Total 


. $8,656,805 94 


III. DISBURSEMENTS DURING 1876. 

Cash paid for losses and additions ...... $453,743 83 

Cash paid for matured endowments and additions . . . 22,832 47 


Total amount actually paid ........ 

Cash paid to annuitants ......... 

Cash paid for surrendered policies ........ 

Cash surrender values, including reconverted additions applied in payment of pre- 
miums # • •*••)•••• 


$476,576 30 
8,539 95 
243,124 56 

14,799 61 


Cash dividends paid to policyholders, applied in payment of premiums 

Total paid policyholders ...... $894,536 15 

Cash paid stockholders for interest or dividends ..... 

Cash paid for commissions to agents ....... 

Cash paid for salaries and traveling expenses of agents .... 

Cash paid for medical examiners’ fees . . . . . . 

Cash paid for salaries and other compensation of officers and other office employees 
Cash paid for taxes, .......... 

Cash paid for rent and expenses of real estate ..... 

Cash paid for commuting commissions ....... 

Cash paid for furniture and fixtures and safes for home and agency offices . 
Cash paid for advertising ......... 

Cash paid for the following items, viz.: stationery, postage, etc. 

Total miscellaneous expenses ..... $321,344 47 


151,495 73 

24,000 00 
102,450 11 
60,660 22 
10,816 05 
63.578 80 
10,468 85 
16,503 31 
4,754 69 
1,549 84 
10,787 40 
15,775 20 


Total disbursements during the year 


$1,215,880 62 


Balance December 31, 1876 


$7,440,925 32 


Invested in the following : 

IV. ASSETS, AS PER LEDGER ACCOUNTS. 


Real estate, unincumbei ed, cost value 

Loans secured by mortgage on real estate, first liens 


$393,688 65 
5,113,904 52 


LOANS ON STOCK COLLATERALS. 

Par Value. Market Value. Amount Loaned. 
$200,000 00 $229,292 50 $200,000 00 


United States bonds, 


200,000 00 




















32 


STOCKS, BONDS, Etc., Owned by the Company. 


United States bonds, 

Virginia State bonds, 

Mississippi Slate Auditor’s warrants, 
New York City warrants, 

New York County warrants, . 
Brooklyn City warrants, , 


Par Value 
$744,000 00 
30,000 00 
10,000 00 
575,000 00 * 
25,000 00 I 
150,000 00 


Market Value. 
$830,412 00 
8,850 00 
7,500 00 

662,310 00 

168,440 00 


Total (carried out at cost value), 


. $1,534,000 00 


$1,677,512 00 


Cash in company’s office, $3,972.24 ; deposited iu bank, $120,334.84; total 


1,609,025 07 
124,307 08 


Total net or ledger assets as per balance 
Deduct depreciation from cost of assets, 


$7,440,925 32 
21,351 52 


Total net or ledger assets, less depreciation, 


$7,419,573 80 


OTHER ASSETS. 


Interest due and accrued on bonde and mortgages . 

Interest due and accrued on bonds and stocks , . . . , 

Interest due and accrued on collateral loans . . * 

Market value of bonds and stocks over cost ...... 

Gross premiums due and unreported on policies in force December 31,1876 $94,732 91 
Gross deferred premiums on policies in force December 31 . . 258,532 60 


Total . $353,265 51 

Deduct the loading on above gross amount .... 70,653 10 

Net amount of uncollected and deferred premiums .... 


99,659 68 
39,616 00 
159 92 
68,486 93 


282,612 41 


Total admitted assets 


$7,910,108 74 


V. LIABILITIES. 

Net present value of all the outstanding policies in force on the 31st day of Decem¬ 
ber, 1876, computed by the New York Insurance Department, according to the 
American Experience Table of Mortality, with per cent inteiest 
Claims for death losses due and unpaid ..... $12,704 04 

Claims for death losses and matured endowments not due . 92,381 63 

Claims for death losses and other policy claims resisted . . 17,235 11 


Total policy claims ... ...... 

Dividends of surplus, or other description of profits due policyholders, 

National, State or other taxes due ........ 

Amounts due on account of salaries, rents anti office expenses 

Amount of any other liability of the company, viz.: Reserve for extra risks and 
policies lapsed liable to be surrendered ...... 

Liabilities on policyholders’ account, ...... 

Gross surplus on policyholders’ account, 

Total liabilities, 

Estimated surplus accrued on Tontine or other policies where the 

profits are specially reserved for that class of policies . - $5,841 25 

Estimated surplus accrued on all other policies . . . 180,000 00 


$6,656,524 00 


122,320 78 
39,485 70 
6,040 27 
1,583 33 

18,68S 57 

$6,S44,642 65 
1,065,466 09 

$7,910,108 74 


Hon. Matthew Hale —I would ask the indulgence of the com¬ 
mittee on behalf of Mr. Hyde to read the following communication 
which has been handed to me ; it is as follows: 


The Equitable Life Assurance Society, j 
120 Broadway, i 

Hew York, March 19, 1877. ) 

To the Insurance Committee of the House of Assembly of the State 
of New York: 


On or about the twentieth day of January this society was noti¬ 
fied by the Superintendent of the Insurance Department of the 



















33 


State of New York of the resolution passed by the Senate on the 
16th day of January, 1877. 

At the time when this notification was received, the force of the 
Superintendent of Insurance, including the deputy superintendent 
and his clerks, was engaged in making an exhaustive examination of 
the condition of this society, in its office in the city of New York. 

At the same time a committee of nine, composed of policyholders, 
was engaged in a separate but equally searching examination of the 
society’s affairs, in its office. 

From that day to the present date, these examinations have been 
in progress, and coupled with the usual business of the society, which 
is especially engrossing at the beginning of the year, have occupied 
the time and attention of the officers and employees of the society, 
to the exclusion of every thing which was susceptible of postpone¬ 
ment. 

The resolution of the Senate called for the information desired “at 
the earliest date practicable,” and in delaying the report therein 
required, there was no intention on the part of the officers of this 
society to disregard the legal requisitions of the Legislature. It was 
natural to suppose that the late superintendent would, from his own 
examination, supply the omission of the society, in case it was neces¬ 
sary to report at once, as he had every account in his possession. 

Our annual statement, required by the laws of the State, has been 
necessarily delayed to await the report of the different examining 
bodies, and when completed would have contained and will contain 
the desired information in the aggregate, and it was the intention of 
the officers to furnish with that statement all details, legally required 
by the Legislature, or the department of insurance ; it was.from these 
causes and from no disrespect to the Legislature that the information 
has been delayed, and I desire to express my regret that the omis¬ 
sion occurred. 

I now beg leave to submit a full statement, under oath, in accord¬ 
ance with the requirements of your resolution of the twelfth instant. 

In presenting this statement, I trust you will pardon my ventur¬ 
ing a few observations pertinent to the matter inquired of, and quite 
necessary to enable any one to form a correct judgment in regard to 
the amounts paid by this society in salaries: 

The Equitable Life Assurance Society of the United States was 
organized in 1859, since which time there has been forty-one (41) 
life insurance companies organized in this State, with equal oppor¬ 
tunities for success. These companies were, for the most part, 
formed contemporaneously with, or within the live years succeeding 
the organization of the Equitable Life. 

Of this number, twenty-nine (29) have been wound up in one 
manner or another, leaving twelve (12) in tli 3 field. 

Now, the cash assets of the Equitable are upwards of $31,50 \000,, 
while the combined assets of the twelve companies amounted, accord¬ 
ing to the last published official reports, to be but $30,000,000. 

The surplus of the Equitable Life is over $5,500,000, and no part 
of it is composed of premium notes. 

The combined surplus of the remaining twelve companies by the 
3 


last published official reports, was $2,700,000, and these combined 
companies hold premium notes, as assets, exceeding $3,600,000, or 
nearly a million dollars more than their combined surplus. 

This comparison is made, not to disparage other companies, many 
of whom have done well under difficulties of no ordinary character, 
but that your honorable body may, at a glance, understand the re¬ 
sults which have been accomplished in eighteen years by the man¬ 
agement of this society, and for the attainment of which the salaries, 
mentioned in the accompanying list, have been authorized by the 
directors of this society. 

The total salaries for the year 1376, including salaries and travel¬ 
ing expenses of managers of agencies and general, special and local 
agents, were $285,000, while the total reported by the other twelve 
companies in the latest published official reports were $528,000, or 
nearly double. 

At the beginning of 1877, the salaries of the Equitable Society 
were reduced $26,320.72 for the current year. 

It is but just that the salaries of a large and successful company 
like the Equitable Life should be viewed in conjunction with the 
results achieved, at a much larger expense, by other companies 
organized contemporaneously or since. 

Very respectfully yours, 

Ii. B. HYDE, President . 


H. B. Hyde, sworn. 

Examined by Mr. Hale : 

Q. Will you produce a statement of the salaries paid by your 
-company ? A. 1 have a statement, in which I confine myself closely 
to the wording of the resolution; it is very brief. 


Salaries, Fees and other Compensation of Officers arid Employes 
of the Equitable Life Insurance Society of the United States for 
the year 1876. 


President ...... 

Yipe-President . . . . 

Actuary ..... 

Secretary .... 

Assistant actuary .... 

Assistant secretary .... 

Auditor . .... 

Cashier . .... 

Superintendent bond and mortgage department 
Seventeen book-keepers, at an average salary of $2,437 
to a total of . . . . . 

Twenty-five accountants and clerks, at an average sal¬ 
ary of $1,246.48 .... 


$37,500 00 
22,000 00 
20,000 00 
16,500 00 

7.500 00 
5,000 00 
5,000 00 
5,000 00 

4.500 00 

41,430 00 
31,162 00 





35 


Thirty-five under clerks and boys, at an average salary 

of $342.83 . 11,999 32 

Salary in commutation of constructing engineers’ per 

centages on buildings .... 15,000 00 

Eight special agents, inspectors and adjusters, at an 

average salary of $1,995.55 . . . 15,964 30 

Ordinary fees of fifty-two directors for board meetings 

and meetings of standing and special committees . 9,071 00 

$247,626 62 


Salaries snd Traveling Expenses of Managers of Agencies and 

General , Special and Local Agents. 


Superintendent of agencies . . . . $7,500 00 

New England manager . . . 5,000 00 

Adjuster and confidential traveler . . . 4,500 00 

Cashiers at agencies . . . . . 9,036 42 

Traveling expenses . . ... 10,557 77 


$36,594 19 


Salaries , etc., of Medical Examiners. 

$16,500 00 
7,000 00 
1,041 66 
22,731 81 


$47,273 47 


Paid Attorneys and Counselors for the year 1876. 

Principal counsel ..... $12,000 00 

Attorneys in New York for litigated business, advice 
and incidental disbursements . . • 9,949 19 

To thirty-three other law firms in different parts of the 

United States ..... 13,346 10 


$35,295 29 


Chief medical examiner 
Associate, part of year 
Associate, part of year 
Other examiners’ fees 


City and County of New York, ss. : 

Henry B. Ilyde being duly sworn, says that he is president of the 
Equitable Life Assurance Society of the United States, and that the 
foregoing statement truthfully sets forth the sums paid by said 
society for salaries, fees and compensation of, or donations to the 















36 


president, 

counselors 


vice-president, secretary, medical ^examiners, attorneys,, 
and other employes for the year 1876. 

11. 1 y. H 1 Uit. 


Sworn to before me this 19th ) 
day of March, 1877. I 

Chakles C. Deming 
Notary Public (65), JV. Y. County. 

Mr. Hyde—I have also prepared an additional paper which I pre¬ 
sumed would be called for, although not contained in the text of the 
resolution I received from your honorable body. It is with regard 
to my compensation from the organization of the company to its. 
present moment, the total sums paid to me from the commencement 
to which I testify under oath. I will read first the salaiies and aftei- 
ward the extra compensation I have received for years : 


Salary Mav 1, 1859, to Dec. 31, I860 . . . $1,000 00 

Year 1860 ..... 1,749 99 

Year 1861 ..... 2,666 63 

Year 1862 ..... 3,000 OO 

Year 1863 ..... 5,000 00 

Year 1864 . . . . • 5,000 00 

Year 1865 ..... 7,500 OO 

Year 1866 ..... 7,500 00 

Year 1867 ..... 7,500 00' 

Year 1868 .... . 7,500 00 

Year 1869 . . . . . 7,500 00- 

Year 1870 . . . . . 7,500 00 « 

Year 1871 ..... 7,500 00 

Year 1872 . . . . . 7,500 00- 

Year 1873 ..... 7,500 00 

Year 1874 ..... 7,500 00* 


Then comes an amount 1 have not included, which was paid to me 
for disbursements in the early history of the company ; we raised 
$100,000 the whole of which sum was immediately paid to the 
authorities at Albany : there was a premium on that of $1,600; 
there were disbursements I made at the time determining never 
to call upon the company for it if the company was lame; the 
company went well and they paid me $5,000, which I have not 
included as I had no personal gain from it; my extra compensation 
is as follows: 


For 1864 and previous 

1867 and previous 

1868 

1869 

1870 

1871 

1872 - 

1873 

1874 - 


$16,199 83- 
- 20,060 21 
28,000 00 

- 26,171 37 
34,598 64 

- 42,458 50 
50,000 OO 

- 50,000 00- 
50,000 OO 








37 


Mr. Hyde’s contract with the society expired at this date and no 
new contract was made on the basis of a per centage on the surplus 
•of Jhe society ; from this date the president was paid a salary of 
$37,500; in 1875 there was due to Mr Hyde $63,822 under his con¬ 
tract for the past live years; this amount he surrendered to the 
.society; at the close of 1875 the society added to Mr. Hyde’s com¬ 
pensation $20,000 from the sum so surrendered; the society made a 
similar addition to Mr. Hyde’s compensation from the same source 
at the close of 1876. 

Salary for 1875 - - - - - $37,500 00 

Salary for 1876 - . - - - - 37,500 00 


$485,905 25 


The average compensation which Mr. Hyde has received during 
his eighteen years’ connection with the society, has been, from all 
..sources, $29,217 per annum. 

STATE OF HEW YORK, ) 

7 l o n • 

City and County of Hew York, j ‘ * 

Henry B. Hyde being duly sworn, upon his oath, says that he is 
the president of the Equitable Life Assurance Society; that the fore¬ 
going statement is a true exhibit of all the moneys received by him 
.in the way of salary or compensation, from the foundation of the 
society in 1859, to the present time; and that he has received no 
other sum or sums of money from said society during that period as 
-compensation or for his personal benefit, either directly or indirectly. 

H. B. HYDE. 

.Sworn before me this 19th ) 

-day of March, a. d. 1877. j 

David Paton, 

Notary Public (131), N. Y. County. 

By Mr. Hale. 

Q. You have been president since the formation of the company ? 
A. Ho, sir; I was vice-president from the organization of the com¬ 
pany, and president since, I think, 1873; I would state that on the 
organization of the company, I left a lucrative position; I was the 
real moving force in the organization of the company; I took a less 
salary than the directors desired to pay me, telling them at the time 
that I was willing to base my future compensation on the success of 
the company; if the company succeeded it was to pay me a liberal 
salary; if it had a moderate success, or a failing success, I should 
not expect to receive a large compensation. 

Q. During the time you were vice-president were you the most 
active officer? A. I have always been the active officer of the com¬ 
pany on whom the company has relied for energy, protection and the 
pushing of its business. 

Q. You say your contract expired in 1874; state whether the 






40 


Q. How much salary do you pay him ( A. I think $2,000 or 
S2 500. 

Q. How much do you receive annually for the entire service? A. 
I have received for the services about $20,000 during the last year. 

Q. Well, how much in the year 1874? A. I think about the same. 

Q. About the same ? A. Yes, sir. 

Q. And the same in 1875 ? A. Yes, sir. 

Q. And in each of these years you paid a person who had the 
actual charge of the office about $2,500 ? A. T es, sir. 

Q. And the balance was received and retained by you ? A. 1 es, 
sir. 

Q. Had your own company an agent in the city of Boston; this 
was an agency for the Mutual, I understood you ( A. \ es, sir. 

Q. The company which the gentleman just sworn represented ? A. 
Y es, sir. 

Q. Had your own company an agent in Boston ? A. T es, sir. 

Q. Who was that agent? A. We had a Mr. Blodgett; I think he 
was the latest agent. 

Q. Your father continued to be agent down to the time of his 
death? A. Yes, sir. 

Q. And you continued the nominal agent, as you had been previ¬ 
ously ; and substituted for the name of your father the name of Mr. 
Hammond? A. Yes, sir. 

Q. Has Mr. Hammond been at any time nominally or actually 
agent of the Equitable in the city of Boston ? A. My father was 
agent, in part of the Equitable, and agent of the Mutual Life in the 
late years of his life. 

Q. My question is whether Mr. Hammond was nominally or other¬ 
wise the agent of the Equitable? A. Ho, sir; he has never been. 

Q. Has he ever received any compensation for services, or alleged 
services, either‘directly or indirectly from the Equitable ? A. I think 
he has, at times, put business into the Equitable. 

Q. Have you any means of stating what compensation has been 
paid to him by the Equitable, or what amounts? A, I cannot say, 
for I have not the information here. 

Q. You have the information at the office? A. Yes, sir 

Q. I think it would be very desirable to attain it ? A. He has been 
paid no more than the regular per centage, 

Q. What is that ? A. The interest we pay is twenty-five per cent 
on the first year, and seven and a-half per cent on the renewal. 

Q. How long does this continue ? A. According to the contract 
we make. 

Q. What is the rule ? A. It may continue twenty years, or twenty- 
five years, or during the life, according to the contract made. 

Q. You have no rule then ? A. We have no rule that is not 
flexible. 

Q. Have you no general rule as to how this compensation runs ? 
A. Generally the compensation is made to run about twenty years: 
sometimes during the life of the person, and in particular cases we 
have allowed persons to nominate lives of those who would be con- 


41 


nected with the agency, and on whom the business would run, and 
by whom the commissions were drawn. 

Q. Have you any means here, or can you in any way approximate 
to the amount Mr Hammond has received from your company ? A. 
I cannot say. 

Q. You cannot approximate ? A. No, sir; I would like to state 
that I have been thinking in regard to the matter, and I think that 
should be about fifteen years; I think I was wrong when I said 
twenty. 

Q. Have you any means of knowing ? A. I have the means of 
knowing, and I think that is as near as you can get it; I think I am 
mistaken when I put it at twenty. 

By Mr. Lang : 

Q. Why is the twenty-five per cent and interest paid ? A. That 
is about the average grade of our commissions; sometimes we make 
it more on renewals, at other times less; sometimes, when we have 
.been paying office expenses of agencies, we would put it in a shape 
so that we would have to pay no expenses; we endeavor to do the 
best we can for the company, and grade it, and so make our arrange¬ 
ments that if there is no business there is no expense. 

Q. Are you restricted in any way, by law or by your charter, as 
to the amount you should pay your agents; in other words are you 
in any way restricted, in case the company should virtually decide to 
.employ too many agents, as to how many it should pay itself? A. 
The finance committee examine into these cases; our contracts come 
before the finance committee, and the rule of the company I have 
stated ; sometimes we may give more and sometimes less on renew¬ 
als, but we endeavor to make it approximate that; sometimes, if we 
.think it wise, we may allow an additional commission on the business 
done, for the purpose of not allowing the agent office rent and to 
pay the expense of advertising; we always like to do it if we can, 
for if we can get an agent on commission and have him do his busi¬ 
ness that way, so that in case he does no business there is no expense 
we think we are doing a good thing. 

Q. You stated that the salary of the vice-president is $22,000 ? A. 
Yes, sir. 

By Mr. Moak : 

Q. Beginning with 1859, what was the salary of the vice-presi¬ 
dent ? A. Our vice president was not connected with us at that 
.time; I was the vice-president; I think the vice-president connected 
himself with us in 186T. 

Q. You became president when he was vice-president? A. No 
lie was second vice-president, 

Q. Commencing in 1859, you were vice-president down to what 
time ? A. To 1873. 

Q. From 1859 to 1873, did you have any president? A. Yes, sir; 
FI. C. Alexander was president of the company until 1873, when he 
died. 


42 


Q. From 1859 to 1873 what was his annual salary? A. His salary 
never exceeded $12,000 ; it commenced, 1 think, at $1,500, and was 
gradually put up to $12,000, and that perhaps two or three years 

before his death. 

Q. Did he receive any compensation on the basis of a per centage ? 
A. He did not. 

Q. He received a round sum? A. Yes, sir. 

Q. And from 1859 to 1873 you v T ere the vice-president ? A. H es, 
sir. 

Q. From what time did you have an assistant vice-president ( A. 

I think about 1867. 

Q. And did he receive any compensation, or has he ever received 
. any compensation from the company upon a basis of a per centage ? 
A. Yes, sir, he has. 

Q. What was his salary as it first began ? A. It was, I think, 
$3,500. 

Q. That was his regular salary? A. Yes, sir. 

Q. What did he receive in addition ? A. I think he received 
a-lialf per cent of the surplus ior five or six years. 

Q. That would be one-fifth of wdiat you received by way of per 
centage ? A. Yes, sir. 

Q, Down to w r hat year? A. Down to the close of 1874. 

Q. Then was the vice president’s salary increased above $3,500 ; 
the regular salary above the per centage ? A. Yes, sir. 

Q. When was that increase made? A. I should think about 1870; 
it went through several grades of increase, until he received a salary 
of about $10,000. 

Q. In addition to the per centage ? A. In addition to the per 
centage. 

Q. How long did it continue at $10,000 ? A. It continued up to 
the close of 1874. 

Q. For about how many years was it $10,000? A. I should think 
his salary was $10,000 for three or four years. 

Q. How much was it before that ? A. I should say about $7,000 ; 
one year it was $5,000 

Q. And all those years, down to 1874, he had received a-lialf per 
cent of the surplus? A. Yes, sir. 

Q. Or one-fifth of the per centage commission that you received ? 
A. Yes, sir. 

Q. Flave you, at any time since your organization, had more than 
one assistant vice-president ? A. Ho, sir. 

Q. You became president, when? A. In 1874, I think. 

Q. How, were there any other officers of the company who have 
received, at any time since its organization, any compensation 
depending upon a per centage ? A. The only other person that has 
been the actuary. 

Q. When the actuary began, in 1859, how much was his annual 
compensation ? A. $1,200. 

Q. And any per centage compensation in addition ? A. I cannot 
say exactly the time that his per centage began, but I think about 
the time the vice president’s began. 


43 


Q. That was in 1864? In 1867; I should say about 1867 or 
1868. 

Q. Then up to about 1867 or 1868 he had received no per centage 
compensation according to your recollection ? A. I should say not. 

Q. About what was his annual salary from 1859 down to 1867? 
A. I should say $10,000 or $12,000 ; I am not absolutely certain. 

Q. Then in 1867, or about that time, the annual compensation of 
the actuary was $10,000 ; that he received absolutely ? A. I should 
say so approximately. 

Q. And about that time you began, in addition, to pay him a com¬ 
pensation depending on a per centage ? A. Yes, sir. 

Q. From 1837 to 1874, did his annual salary continue the same,, 
at $10,000 ? A. My impression is, it did sir. 

Q. From 1867 to 1874, what per centage compensation did he 
receive ? A. A-half of one pe cent. 

Q. That was the same as the assistant vice-president ? A. Yes,, 
sir. 

Q. One-fifth of what you received ? A. Yes, the same thing ; the 
salaries of the actuary and of the vice-president were about a balance, 
about the same thing. 

Q. In 1867, when the actual extra compensation or per centage 
compensation began, was he paid a sum for back years in the aggre¬ 
gate, or only for one year? A. It commenced flush with the year. 

Q. He was allowed no back compensation as you know? A. Ho, 
sir. 

Q. His arrangement continued down to the close of 1874 ? A, 
Down to the close of 1873. 

Q. Since that he has received the compensation which you have 
stated here—to wit, $20,000 a year? A. Yes. 

Q. Have any of the officers stated, in the list you have produced, 
received, directly or indirectly, for any alleged services in any 
direction whatever, any sum of money which belonged to the com¬ 
pany—except what you have stated—since 1873 ? A Hot one 
dollar. 

Q. Has any member of the family, or either of them, received any 
money whatever from the company, except what you have stated as 
having been received by your father in connection with the Boston 
establishment ? A. Ho, sir. 

Q. I think you have stated that you have no connection with any 
other company, except in the way you have spoken of, in regard to 
this Boston company? A. Ho, sir. 

Q. Has the vice-president had any connection, directly or indi¬ 
rectly, with any other company, corporation, or organization, either 
as agent, officer, director, or in any other capacity ?, A. Ho, sir. 

Q. At any time since 1867? A. Ho, sir. 

Q. Or the actuary ? A. Ho, sir. 

Q. Or any of the officers? A. Ho, sir; we have had just as 
much as we could do to attend to our own business. 

Q. Well, that does not quite answer my question ? A. Then I will, 
answer it in this way, no, not in any way, shape or manner. 



44 


By Mr. Moody : 

Q. Has your company re-insured the risks of any other companies ? 
A. I think about fourteen or fifteen years ago we reinsured the 
Baltimore Life Insurance Company, a very good little company. . 

Q. That you say was about how long ago; A. I should think 
about sixteen years ago. 

Q. How much was the aggregate amount you reinsured then ? A. 
It was a little mite of a thing. 

Q. You would call a small company what we might call a large 
one? A. It was a very small company. 

Q. Well give us, as near as you can, about the amount you rein¬ 
sured them ? A. I should not think they had a risk of more than a 
million and a-half, at a rough guess. 

Q. Do you think your company reinsured about that amount for 
them ? A. I should think so. 

Q. What was the name of the company ? A. 1 ou could find out 
what it was by calling it the Baltimore Life Insurance Company. 

Q. Were the officers of your company allowed a per centage on 
the reinsurance ? A. Ho, sir. 

Q. Hone whatever ? A. Ho, sir. 

Q. Did any one connected with the company receive any compen 
sation whatever, either directly or indirectly, for any services, or the 
alleged services, growing out of the reinsurance ? A. Hot one dollar. 

Q You spoke of another reinsurance; what was that? A. It was 
a small company in Montgomery, Alabama; it amounted, in reality, 
to the transferring of a little company, through the president 
and directors, into a good agency; that is what it amounted to, and 
it was a very small company. 

Q. About what was the amount of the reinsurance on that ? A. I 
should not think it was larger than the other. 

Q. About the same amount ? A. I should think so. 

Q. Did you, or any one connected with the company, receive any 
compensation, either directly or indirectly, for that reinsurance ? A. 
Hot one dollar. 

Q. Has your company made any other reinsurance since its exist¬ 
ence, with the exception of those you have spoken of. A. Ho, sir. 

Q. Has it not made any of late years? A Ho, sir. 

By Mr. Wei ant : 

Q. Won’t you state the manner in which this arrangement was 
brought about? A. Well, sir, the reasdn the larger companies have 
given up the business of reinsurance have been— 

Q. Ho ; I want to get at the manner in which you reinsure them ? 
A. The way we did was to take the liabilities of the company, and 
see what would be the sum they would have to pay us. 

Q. You did do that? A. Yes; we did take the liabilities of the 
company, and did calculate how much money should be paid to us, 
which, in addition to the premium received, and a liberal margin ac¬ 
cording to the laws of the State of Hew York, valuing at four and a 
half per cent, would make us whole, and enable us to do a good thing 


X 


45 


for our policyholders ; so that it would approximate with the ordi¬ 
nary business we should do across our counter. 

Q. Had the consent of the policyholders anything to do with the 
reinsurance ? A. I have had frequent opportunities of knowing 
both these cases, that it was at the desire and instigation of the 
policyholders. 

By Mr. Moak : 

Q. A on mean of the policyholders of the company you reinsured ? 
A. Yes, sir ; and they were very glad to come. 

Q. You are able to state that they consented, are you? A. We 
never heard a remonstrance, and so far as we could learn they were 
very glad of it. 

Q. 4 on infer that, then ? A. I inferred that from the unanimity 
in which it was done, and they were well pleased and satisfied ; we 
never had a complaint from them. 

Q. Did your company make any agreement with that company in 
reference to the matter ? A. Yes, sir. 

Q. The case was talked of and considered in your board of direct¬ 
ors and trustees? A. In our board of trustees, it was. 

Q. And also in the other case? A. Yes, sir. 

Q. And a written contract was made ? A. I presume so ; it is so 
long ago that I can scarcely recollect; it is twelve or fifteen years 
ago; I know the things w T ere all done with great formality, and I 
know we received our full price for the thing, and it was a great sat¬ 
isfaction for the policyholders of the company and ourselves. 

Q. You did not see many of the policyholders? A. Yes, saw a 
good many of them. 

Q. Did you treat with them in making the contract? A. We met 
a good many of them in business. 

Q. Did they take any part in making the contract ? A. I should 
say they did ; I think we were waited upon by a committee of the 
policyholders. 

Q. Have you a written contract of those companies? A. I really 
could not say; I can’t say in regard-to the contract, as it is so long 
ago. 

Q. You can’t say whether you have the contract or not ? A. Ho ; 
I can’t say whether we have or not. 

Q. Or wdiether it could be produced here or not ? A. Ho ; I can’t 
say anything about that. 

Q. Here is an item of salary which reads: u In commutation of 
constructing engineers’ per centages on buildings, $15,000; will you 
explain that ? A. We found, sir, that in the employment of an 
architect it was wise to employ one to draw the plans merely, and to 
employ a gentleman who was an expert builder. 

Q. You are now speaking of the building your company put up 
in Broadway, known as the Equitable building? A. Yes, sir. 

Q. Well, your company determined to put up a building' A. 
Yes, sir ; and we gave this person a salary, in commutation of the 
ordinary commissions, thinking it would be better for the company 
than to pay the ordinary commissions paid for such services. 


44 


By Mr. Moody : 

Q. Has your company re-iusured the risks of any other companies ? 
A. I think about fourteen or fifteen years ago we reinsured the 
Baltimore Life Insurance Company, a very good little company. 

Q. That you say was about how long ago; A. I should think 
about sixteen years ago. 

Q. How much was the aggregate amount you reinsured then ? A. 
It was a little mite of a thing. 

Q. You would call a small company what we might call a large 
one? A. It was a very small company. 

Q, Well give us, as near as you can, about the amount you rein¬ 
sured them ? A. I should not think they had a risk of more than a 
million and a-half, at a rough guess. 

Q. Do you think your company reinsured about that amount for 
them ? A. I should think so. 

Q. What was the name of the company ? A. You could find out 
what it was by calling it the Baltimore Life Insurance Company. 

Q. Were the officers of your company allowed a per centage on 
the reinsurance ? A. No, sir. 

Q. None whatever ? A. No, sir. 

Q. Did any one connected with the company receive any compen 
sation whatever, either directly or indirectly, for any services, or the 
alleged services, growing out of the reinsurance ? A. Not one dollar. 

Q You spoke of another reinsurance; what was that? A. It was 
a small company in Montgomery, Alabama; it amounted, in reality, 
to the transferring of a little company, through the president 
and directors, into a good agency; that is what it amounted to, and 
it was a very small company. 

Q. About what was the amount of the reinsurance on that ? A. I 
should not think it was larger than the other. 

Q. About the same amount ? A. I should think so. 

Q. Did you, or any one connected with the company, receive any 
compensation, either directly or indirectly, for that reinsurance ? A. 
Not one dollar. 

Q. Has your company made any other reinsurance since its exist¬ 
ence, with the exception of those you have spoken of. A. No, sir. 

Q. Has it not made any of late years ? A No, sir. 

By Mr. Wei ant: 

Q. Won’t you state the manner in which this arrangement was 
brought about? A. Well, sir, the reasdn the larger companies have 
given up the business of reinsurance have been— 

Q. No ; I want to get at the manner in which you reinsure them ? 
A. The way we did was to take the liabilities of the company, and 
see what would be the sum they would have to pay us. 

Q. You did do that? A. Yes; we did take the liabilities of the 
company, and did calculate how much money should be paid to us, 
which, in addition to the premium received, and a liberal margin ac¬ 
cording to the laws of the State of New York, valuing at four and a 
half per cent, would make us whole, and enable us to do a good thing 


45 


for our policyholders ; so that it would approximate with the ordi¬ 
nary business we should do across our counter. 

Q. Had the consent of the policyholders anything to do with the 
reinsurance ? A. I have had frequent opportunities of knowing 
both these cases, that it was at the desire and instigation of the 
policyholders. 

By Mr. Moak : 

Q. Y on mean of the policyholders of the company you reinsured ? 
A. Yes, sir ; and they were very glad to come. 

Q. 1 on are able to state that they consented, are you? A. We 
never heard a remonstrance, and so far as we could learn they were 
very glad of it. 

Q. You infer that, then ? A. I inferred that from the unanimity 
in which it was done, and they were well pleased and satisfied ; we 
never had a complaint from them. 

Q. Did your company make any agreement with that company in 
reference to the matter ? A. YYs, sir. 

Q. The case was talked of and considered in your board of direct' 
ors and trustees? A. In our board of trustees, it was. 

Q. And also in the other case? A. Yes, sir. 

Q. And a written contract was made ? A. I presume so ; it is so 
long ago that I can scarcely recollect; it is twelve or fifteen years 
ago ; I know the things were all done with great formality, and I 
know we received our full price for the thing, and it was a great sat¬ 
isfaction for the policyholders of the company and ourselves. 

Q. You did not see many of the policyholders? A. Yes, saw a 
good many of them. 

Q. Did you treat with them in making the contract? A. We met 
a good many of them in business. 

Q. Did they take any part in making the contract? A. I should 
say they did ; I think we were waited upon by a committee of the 
policyholders. 

Q. Have you a written contract of those companies? A. I really 
could not say; I can't say in regard>to the contract, as it is so long 
ago. 

Q. YY>u can’t say whether you have the contract or not ? A. Yo ; 
I can’t say whether we have or not. 

Q. Or whether it could be produced here or not ? A. Yo ; I can’t 
say anything about that. 

Q. Here is an item of salary which reads: “ In commutation of 
constructing engineers’ per centages on buildings, $15,000; will you 
explain that? A. We found, sir, that in the employment of an 
architect it was wise to employ one to draw the plans merely, and to 
employ a gentleman who was an expert builder. 

Q. You are now speaking of the building your company put up 
in Broadway, known as the Equitable building? A. YYs, sir. 

Q. Well, your company determined to put up a building ? A. 
Y r es, sir; and we gave this person a salary, in commutation of the 
ordinary commissions, thinking it would be better for the company 
than to pay the ordinary commissions paid for such services. 


46 


Q. Is that building the only real estate the title to which is in 
your company ? A. Well, the title of our company consists in and 
we hold, in addition to the new Equitable building, numbers 112 
and 114 Broadway, a little building we bought from the bank. 

Q. Then you do own other real estate? A. Yes, sir. 

Q. When did your company determine to erect the building known 
as the Equitable building? A. Well, about 1867 we came near 
having ail our documents destroyed by tire ; in fact, we have lost 
many documents by a fire that took place in our old office, and I 
made up my mind we would have a fire-proof building; we suffered 
a great deal of confusion and annoyance in consequence of that fire, 
and I bestirred myself to have a fire-proof building. 

Q. About when did your company determine to erect that build¬ 
ing? A. In 1867. 

Q. Did the company purchase the land on which the building 
stands for the purpose of erecting it ? A. It did. 

Q. What was the expense of the real estate on which it is erect¬ 
ed ? A. Of the land ? 

Q. Yes; of the real estate I am speaking of, as you purchased it? 
A. I could hardly, with accuracy, give an answer to that question. 

Q. You can get pretty near to it, can’t you ; I don’t want you to 
give the actual figures? A. I should say about seven or eight hun¬ 
dred thousand dollars ; it was bought of five different parties. 

Q. What I want to get at is the amount paid in round numbers ; 
then you determined upon the real estate to erect a building, and 
when I say, you, of course, I mean your company ? A. Yes, sir. 

Q. And the plans were prepared, under arrangement, for its erec¬ 
tion? A. Yes, sir. 

Q. About how much was paid for the preparation of the plans ? 
A. I think we had a half a dozen architects who were given, per¬ 
haps, three or four hundred dollars, each of them, to draw a plan. 

Q. Give, as near as you can, about the aggregate paid for the 
plans ? A. I say, I think we had paid a half a dozen architects, 
and each of them drew a plan, and were paid four hundred dollars 
each. 

Q. Then from two thousand to twenty-four hundred dollars it 
cost you? A. Yes, sir. 

Q. Then it was determined to erect a building upon the plan of 
one architect? A. Yes, sir. 

Q. Then you paid him a percentage upon the cost of the building ? 
A. We paid him a percentage on the cost of the building for draw¬ 
ing all the necessary life-sized plans; then the compensation was 
fixed of the gentleman who is paid that salary; he occupied the 
position known in England as clerk of the works ; he attended to all 
the business details. 

Q. He was the superintendent, wasn’t he ? A. Yes, he is the 
superintendent; he is generally with the architect a unit; but in 
this instance we separated them and paid him a salary so that his 
interests should not be against us in making the contracts and pur¬ 
chases ; if you pay him a commission the contracts, as a o-eneral 
thing, will be large. 


47 


Q. You paid him, how much per cent.? A. We did not pay him 
any per cent.; we paid him so much a year and he attended the con¬ 
struction of the work. 

Q. How much did you pay him ? A. Fifteen thousand dollars a 
year. 

Q. For how long ? A. For two years. 

Q. Did you pay the architect any thing in percentage ? A. T 
should say about two and one-half per cent. 

Q. Upon the actual cost ? A. No, upon the estimate of cost, which 
was less than it actually cost. 

Q. On about how much did you pay him that percentage ? A. I 
could not tell you. 

Q. Well, give as near as you can ? A. Say from two to two and 
a half millions on the New York building;. 

Q. This $15,000 is what; part of the commutation, you say; 
explain tli it ? A. It is part of the commutation of the commission 
that would naturally be paid to the superintendent. 

Q. How much was paid to the superintendent in the aggregate 
from beginning to end ? A. I think that run over a period of about 
two years. 

Q. Fifteen thousand dollars a year? A. Yes, sir. 

Q. Then why does he receive compensation in 1876 ? A. Because 
the building was not complete until that time; indeed, we have just 
about got the building linished now; there are many things about 
the building that require attention ; that salary was continued a year 
after the building was nominally finished, as we had a million and 
one things to attend to ; he was Avorked harder than he Avas before 
as he was a practical engineer, and we found his salary would be 
saved by paying it that year; it has since been cut down to $7,500. 

Q. When did this compensation commence ? A. I should say 
some time in 1874. 

Q. But I thought you said you commenced building in 1867 ? 
A. We determined to erect the building in 1867. 

Q When did you commence an erection of the building ? A. I 
should say about 1867. 

Q. And from that time this superintendent’s fees or salary I sup¬ 
pose began ? A. No, sir; he had nothing to do A\ T ith it then. 

Q. When did he have anything to do with it ? A. About 1874. 

Q. Then you had no such officer during the erection of the build¬ 
ing? A. The building vvas erected in two sections, and in the last 
of it this person was connected in that capacity. 

Q. You had no such officer before ? A. No, sir. 

Q. About what Avas the aggregate expense of the erection of the 
building as it stands ? A. It stands on our books at about three 
millions and three-quarters. 

Q. The building alone ? A. No; the real estate and building 
together ; the entire unit. 

Q. About what amount does it pay upon the cost ? A. it pays, 
after deducting taxes and all possible expenses in connection with it, 
from actual examination of our books, an income on the property of 
about live and a half per cent net. 


48 


Q. That is, net income independent of all expenses ? A. Y es, sir. 

By Mr. Weiant : 

Q. Estimated at what value ? A. About three and three-quarter 
millions; I have to give them a little bit rough in this statement; I 
am perhaps very near the facts. 

By Mr. Moak : 

Q. The question I want to get at is, whether it is a good invest- 
ment ? A. We cannot put our money out to pay us as much as that: 
we have money put out at three and a half per cent. 

Q. What other building does the company have or own the title 
to? A. Nos. 112 and 114 Broadway. 

Q. That is just below you there? A. Yes, sir. 

Q. Any other ? A. And a little building that we bought of the 
Metropolitan bank; it was absolutely essential for us to have it for 
the preservation of our light. 

Q. About what is the value of the real estate to which you have 
the title, deducting the Equitable building proper ? A. I think about 
$450,000. 

Q. Those are let, I suppose? A. Yes, sir. 

Q. About what per cent on the investment do they bring ? A. I 
think they bring a net income—this thing is all going to be stated 
by the committee of which Governor Morgan is chairman, in a few 
days—I think about five per cent in the net. 

* 

By Mr. Weiant : 

Q. Do I understand you to say the company don’t own any more- 
real estate? A. We own a building in Boston. 


Bv Mr. Moak : 

•j 

Q. They own a building in Boston ? A. Yes. 

Q. And about what was paid for that? A. The building, teetotally 
cost us about $1,100,000. 

Q. Have you a branch office there? A. Yes, sir;, a very import¬ 
ant branch office there. 

Q. Who has charge of that ? A. Mr. H. T. Blodgett. 

Q. Is the title of that real estate in Boston in your corporation ? 
A. Yes, sir. 

Q. And about what income does that bring upon the expense ? A. 
I think that building yields, as near as I can remember, about four 
and a-lialf per cent. net. 

Q. Does that include all the real estate of which your company 
has the title ? A. Yes, sir. 


By Mr. H usted : 

Q* Don t you own real estate that you have taken on mort£ra£$ 
foreclosure? A. Yes, sir. " b 

\ 


49 


By Mr. Moak : 

Q. Do you own real estate, the title of which has become vested 
in the company by foreclosures ? A. Yes, sir. 

Q. To what extent % A. I think about $350,000 or $400,000. 

Q. About where is it located ( A. It is within the State of New 
York. 

Q. All of it ( A. All of it; we have never availed ourselves of 
the privilege we enjoyed of going out of the State of New York, 
except into New Jersey, and fifty miles off. 

Q. Y ou say you have $350,000 or $400,000 worth of real estate 
purchased on foreclosure; how much was the amount in mortgages, 
in the aggregate, upon which the property was purchased? A. I 
should say, in amount, it brought the price at which we held it. 

Q. In other words, what you mean to say is, you bought the 
property at about the face of the mortgages in the aggregate. A. 
Yes, sir ; about the face of the mortgage. 

Q. Have you any means of knowing the actual value of the real 
estate so purchased ? A. The committee, of which Governor Mor¬ 
gan is chairman, have made, during the past three months, a most 
exhaustive examination of all our real estate, and it has been ap¬ 
praised by appraisers, and each parcel of real estate we own has been 
thoroughly examined by one of three appraisers; their report will 
be published in about three days. 

Q. Can you state whether the real estate is valued at what you 
purchased it for on the mortgage foreclosure ? A. I don’t believe 
there will be a difference of ten per cent either way. 

By Mr. Hale : 

Q. Suppose you name who the committee are \ A. The examin¬ 
ing committee consists of E. D. Morgan, James M. Morrison, B. B. 
Sherman, M. K. Jessop, C. N. Bliss, Charles S. Smith, W. A. Whee- 
lock, C. J. Franklin and F. D. Tappen ; these gentlemen have en¬ 
gaged appraisers and made a thorough examination of every piece 
of real estate we own. 

Q. Suppose you state who those gentlemen are ? A. Governor 
E. I). Morgan is, I suppose, well known in this locality; James M. 
Morrison is president of the Manhattan Bank; B. B. Sherman is 
president of the Mechanics’ Bank; M. K. Jessop is in the banking 
house of Jessop, Paton A Co. ; C. N. Bliss is of the firm of Bliss A 
Fabien ; Charles S. Smith is of the firm of George C. Bichardson A 
Co.; William A. Wheelock is president of the Central National 
Bank ; C. J. Franklin is the American representative of the Ounard 
line of steamers; F. D. Tappen is president of the Galvin Bank; 
they have employed, for the purpose of valuing their real estate, Mr. 
Isaac Walton and Mr. Willis Blackstone, and between them they 
have made a rigid examination of our real estate in remote country 
places ; and other persons have, of necessity, been employed by the 
committee ; they have also employed Mr. Fackler, the actuary, to 
compute all our liabilities; our liabilities, within the last three 
months, has been computed by three separate valuations. 

4 


50 


By Mr. Wei ant : 

Q. Bo you know whether any of the members of this committee 
really visited the property themselves for the purpose of estimating 
its value? A. No, sir; this committee directed. 

Q. So they rest their case and statement upon some one else who 
did ? A. They selected some one else for this purpose ; the best 
recognized experts in New T ork. more competent to value real 
estate than any one else, perhaps. 

Q. You were reading the titles of those men but they never in¬ 
spected the property ? A. Those men have picked out the men that 
should do it; we have not. 

Q. Have any members of the committee inspected it and valued 
it ? A. It is done by the person appointed. 

Bv Mr. Cowdin : 

Q. I understand these gentlemen have had charge of the examina¬ 
tion ; they are all well known in New York and hold high positions, 
but being business men, have not had time to examine the real 
estate, but employed the best men to do it in their judgment ? A. 
Yes, sir. 

By Mr. Wei ant: 

Q. How were they selected in remote counties to make the esti¬ 
mate? A. I cannot tell you; they were selected by the committee, 
not the officers; this committee came into the office and got their 
authority to employ experts, and they went on of their own accord; 
we were not Consulted; the}^ have done the thing in their own way; 
they have picked out their own appraisers, actuaries and a-half a 
dozen accountants of their own, and have done the thing in their 
own way, and we were not consulted. 

By Mr. Cowdin : 

Q. By what authority did they come ? A. By the authority of 
the finance committee; they were selected by the finance committee. 

By Mr. Skinner : 

Q. This examination is at your own request ? A. At the request 
of the finance committee. 

By Mr. W eiant : 

Q. Can you give us the amount that was loaned on this property- 
purchased in ? A. I shall say that it would be about the same that 
we bought it in at. 

Q. Give us the figures? A. I should say we had originally 
$350,000 in real estate. 

Q. ^ cu had that amount invested in bond and m or tirade unon 
that property ? A. Yes, sir. " & 

Q. What did you buy it in at 2 A. I should think at the face of 
ilie mortgage, varying perhaps ten or fifteen per cent. 


V 


51 


Q. 1. ou bought it in ' A. Yes ; and whatever deficiency there is 
the bonds will be prosecuted for. 

By Mr. Skinner: 

Q. You also stated that the Insurance Department is making an 
investigation ( A Yes, sir, a searching investigation ; I would like 
to say here that the Insurance Department has examined the title to 
every piece of property we own. 

Bv Mr. Moak : 

«/ 

Q. Will you state to us what is the plan, or theory upon which 
you loan money upon real estate ? A. Persons make application to 
us, and sign a paper requesting a loan ; that is viewed by the officers, 
and if they think it is a proper loan and a proper piece of property 
to loan on, together with a proper place to loan in, the property is 
valued by the appraisers, and then it is presented to the finance 
committee. 

Q. What appraisers? A. Appraisers appointed by the finance 
committee ; if it is an extraordinary thing, upon which the officers 
know we would not loan, we don't go through with that routine, but 
tell them it is improbable we should loan on it, and it is withdrawn. 

Q. Are those appraisers the same right along, or are they different ? 
A. All the appraisers are employed by the finance committee; two 
or three we employ in New York; none are employed who are not 
thor6ughly known to the finance committee. 

Q. The question is, whether you have the same appraisers for the 
great majority of cases, or different appraisers for each case ? A. 
No, sir. 

Q. These persons, you have spoken of, appraised the value of the 
real estate { A. Yes, sir. 

Q. Exclusive or inclusive of the buildings ? A. If it is a farm, 
exclusive of the buildings ; if a house and lot in New York, inclu¬ 
sive. 

Q. If you conclude to loan, how much of the value do you loan 
on it? A. We loaned forty per cent of our own appraisement; 
sometimes fifty, sometimes thirty-three and a-half, depending upon 
the locality. 

Q. What is the highest you go ? A. Fifty per cent. 

Q. As to the expense of the loan, and that attending the search of 
the title, by whom is that paid ? A. By the persons who apply to 
us for the loan. 

Q. Is that service performed by your own officers ? A. Yes, sir. 

Q. Are they compensated for that by this salary, or do they have 
that in addition thereto ? A. They have it in addition. 

Q. Have you any idea or means of determining how much it 
amounts to ? A. I have not, because it is almost impossible now to 
get good property on bond and mortgage; we have to invest our 
money in governments. 

By Mr. Weiant : 

Q. How do you mean it is almost impossible to find good bonds 


52 


and mortgages ? A. Simply, because it is impossible to get them r 
there is an enormous feeling against loaning on country property, 
and we have to loan on such a small line that it makes men vexed 
if you offer it to them; as a general rule, the amount we are willing 
to offer a man on a farm rather makes that man an enemy than a 
friend, and I generally refrain from making the offer, although if we 
have a good chance in the country to make a loan we make it; we 
are ready to loan in any part of the State of New 1 ork, and have 
abundant chances to do it, but, as I said before, there is more trouble 
about it than you imagine ; there is one thing, I think it would be 
well for the committee to understand, that is, the vast benefit to the 
State of New York this company has been; although you may 
scarcely think it, the healthy insurance companies are bringing 
enormous sums of money into the State which materially benefits 
the State. 

By Mr. Moak : 

Q. Has it loaned much in the State ? A. It has, and I will say 
this, that if a healthy insurance company can get good bonds and 
mortgages they prefer them to governments. 

Q. What is the aggregate of your bonds and mortgages ? A. I 
think the aggregate is about seventeen or eighteen millions. 


By Mr. Hale : 

Q. Almost exclusively in this State ? A. Almost exclusively in 
this State, except in New Jersey and the fifty miles radius that I 
have spoken of. 


By Mr. Moody : 


Q. What is the length of a loan usually? A. We never call in a 
loan when the security is good, and interest paid. 

Q, But your mortgages have a specified time ? A. Yes. 

Q. How long do your mortgages run for? A. A year. 

Q. You loan all over the State and city of New York, and out of 
it? A. We are willing to loan any where in the State of New 
Y ork. 


Q, Have you not a loan in Binghamton ? A. I don’t know that 
we have. 

Q- Have you loaned any on a big hotel there? A. No ; we have 
no big loan in Binghamton that I know of. 


By Mr. Moak : 

Q. 1 on speak here in this list of various officers, such as the chief 
medical examiner and so on; have any of them within the last five- 
years received any compensation other than their regular annual 
salary ? A. No, sir ; we have paid nothing but what is represented 
in that paper. 

# Q« Have any of them, within the last five years, received any 
higher salary than you have stated the salary for 1876 to be ? A. 
No, sir; with the exception perhaps of myself. \ 


53 


Q. 1 ou speak here of the chief medical examiner’s salary, $16,- 
500 5 does he do any business other than that which he performs for 
you; in other words, is he a practicing physician? A. He does not 
as a rule do anything else ; he might possibly make an examination, 
and I think all physicians if called on by a company would make an 
examination, and they might have people that they attend, but to a 
very small amount. 

Q- Who is your examiner ? A. Dr. Edward W. Lambert. 

By Mr. Weiant: 

Q. You have local examiners as well ? A. Yes, sir ; certainly. 

By Mr Moak : 

Q. 1 on speak of the principal counsel; he is paid $ 12,000 a year ? 
A. Yes, sir. 

Q. Y ou also speak of attorneys for litigated business, $9,949.19 ; 
does that include your actual expenses, or only such as you pay dur¬ 
ing the year ; or, in other words, does that include the money paid 
out by the company during that period for legal expenses or cover 
the whole legal expenses of the year ? A. That makes the year a 
unit; there may be expenses that were paid in January that have in 
reality belonged to the year previous, but it includes the year as a 
unit. 

Q. The principal counsel, does he receive anything in addition to 
the $ 12 , 000 ? A- No, sir. 

Q. Who receives the compensation for investigating the titles of 
property in New York, and making the necessary searches ? A. The 
counsel and attorneys. 

Q. Do you have any attorney and counsel independent of the prin¬ 
cipal counsel? A. Yes, sir; we have Mr. Henry Alexander, as 
counsel, and Mr. Henry Day, as attorney. 

Q. How is that amount which they received divided ? A. Each 
receives half of the fees for an examination ; there is no rule about it. 

Q. Do you know how much the examinations amount to in the 
city of New York, say for the last ten years, on property ? A. I 
really could not tell. 

By Mr. Moody : 

Q. These examiners make an examination of the abstract of the 
title of the property, I suppose ? A. Yes, sir. 

By Mr. Moak : 

Q. Well, what does it amount to—these examinations for the last 
ten years of titles on loans made by the company ? A. I really could 
not tell you : we have hardly made any loan on bond and mortgage 
for the last two years. 

Q. I put the question, for ten years, to avoid the present stringent 
condition of affairs ? A. I would like to give an estimate if I could, 
but I cannot; it is not money that we have paid, so I cannot get at 
it very well. 

Q. How long have you paid your principal counsel $ 12,000 a year ? 
A. I think for a few years past. 


54 


Q. Well, about how long ? A. Say five or six years. 

Q. And before that you paid him more or less ? A. Less, L should 

*Q. You have an attorney in addition; what is his compensation? 
A. He has no compensation except for work done. 

Q. He has no annual salary but charges a commission for fees for 

each case? A. Yes, as it comes up. 

Q. How much has been his annual compensation, more or less 
than in 1876—say for ten years preceding ? A. His compensation 
has been very small indeed; I could hardly give an estimate of that 

myself. . . 

Q. I want to get at it relatively, whether it is more or less than in 

1876 ? A. I should say in 1876 perhaps it was less than it had been 
in previous years. 

Q. How much less ? A. I don’t think his average compensation 
would exceed more than $2,000 or $3,000. 

Q. Well, but there is $9,949 paid ; was that paid to more than one- 
attorney ? A. Yes, sir. 

Q. Take the aggregate of attorneys’ fees in the city of Yew Tork 
for ten years previous to 1876, would it be greater or less than the 
amount paid in 1876 ? A. I should think it would be about that. 

Q. And the thirty-three other law firms in different parts of the 
United States, the amount paid to them being $13,346.10 are amounts 
paid counsel for the defense of cases you defend, I presume ( A. I 
Yes, all over the country we are in litigation ; agents trying to de¬ 
fraud us ; lots of troubles. 

Q. At the commencement of the year 1876, about what number 
of policies had your company out ? A. At the commencement of 
the year 1876 ? 

Q. Yes? A. Why, I think about $175,000,000. 

Q. I am speaking about the number, not amount ? A. I can tell 
the amount nearer than the number; I haven’t the number in my 
mind ; the amount of a thing in life insurance is the most import' 
ant. 

Q. I want to get the number as near as I can ? A. I don’t think 
I could give you the number. 

Q. Can’t you give us the number within a thousand or two ? A. 
I can send it to you, sir; 1 never, in making up how much we were 
doing and how we were prospering, think of the number; I have 
figured up the amount rather than the numbers. 

Q. About how much an amount had your company insured at the 
commencement of the year 1876 ? A. About $175,000,000. 

Q. About how much an amount did your company insure during 
1876? A. The insurance report will be here in a very short time, 
and I am not really prepared on this expert question, because I pre¬ 
fer to answer your questions with great accuracy ; the late report is 
not here. 


By Mr. Moody : 

Q, You have not your report in the Insurance Department here ; 


55 


you have not reported yet, have you? A. No, sir; we have been 
waiting until all the things should be sent in together. 

Q. Is that usual? A. No, sir, very unusual; we have been wait¬ 
ing to have the report sent in to the State Superintendent verified, 
that is, in all respects; there has been an understanding that he 
should verify it, rather than have it sent in without being verified. 


By Mr. H ALE : 

Q. He has been engaged in an investigation of the affairs of the 
company, has he not ? A. Yes, sir, for several weeks. 

Q. The report has been withheld to await the result of the exam¬ 
ination ? A. Yes, sir; we have been waiting, at the desire of the 
department, to have the report verified. 

By Mr. Moak : 

Q. The question I put to you was, what was the amount of your 
insurance for the year 18TB; I am speaking now of new insurance? 
A. The new insurance procured by application, I should, think, was 
some seventeen or eighteen millions. 

Q. Now, what would be the aggregate of premiums due upon the 
©Id policies which were in existence at the commencement of the 
year 1876? A. I cannot answer. 

Q. Can’t you approximate it ? A. No, sir, I could not give it; I 
would be very happy to give you the information, but it is something 
I am not prepared to give; I cannot guess at it; it is one of those 
things that it is utterly impossible to guess at, but our books will 
tell that. 

Q. About what would be the aggregate of premiums received 
during the year 1876 ? A. The aggregate of premiums received 
during the year 1876 was about $9,000,000 rising; that is, premiums 
and interest, our total income. 


By Mr. Moody : 

Q. Do you include renewals in that ? A. Renewals, interest, and 
everything else; it would rise between $9,O00,00d and $10,000,000; 
our total income for premiums, old and new, interest, and every 
thing else, w'ould be that. 

By Mr. Moak : 

Q. About what would be the premiums for the last year? A. I 
am talking about 1876. 

Q. I am talking about premiums for new insurance ? A. I cannot 
tell you that. 

Q. Can you state either the number or the amount of the policies 
lapsed during the past year, 1876? A. All that expert knowledge 
will be stated at length' in the report to the superintendent which we 
shall send ; but it is utterly impossible for me to carry it in my head ; 
1 would be glad to do it if I could ; we are hard at work at that re¬ 
port, and it will be finished shortly. 

Q. You have no means of stating it now ? A. No, I cannot. 


56 


Q. Either the amount of the policies lapsed or the number? A. I 
cannot state it; that information is being picked out, and you will 
have it. 


By Mr. Moody : 

Q. What provision do you make to secure policyholders from 
lapsed policies? A. Nearly all of our policies have a protective pro¬ 
vision in them for the policyholders, and many of them have a clause 
guaranteeing that after three payments they shall have its value; 
there never has a man yet walked out of the Equitable doorway, 
whose premium was six months past due, that he did not get the 
value for his policy; it is a custom so absolutely settled by life in¬ 
surance companies, that the company who did not treat people fairly 
would have to go to the wall. 

Q. It is discretionary with you ? A. No, sir, it is not; it is a 
custom as strong as law. 

Q. Do you mean to say the custom is such that it is legally bind¬ 
ing on you ? A. No, I don’t mean to say so, but it is a custom pre¬ 
vailing in large life insurance companies almost as strong as law; 
no large life insurance company that I know of, and I have been in 
business twenty-five years, but I never knew a company do a policy- 
holder an injustice in refusing to give a policy value, even long after 
sixty days has expired. 

Q. Do you mean to say your company has done it ? A. I do. 

Q. You have that clause in your policies? A. Yes, we have in 
most of them. 

By Mr. Lang : 

Q, Do you issue several kind of policies ? A. Yes, sir. 

By Mr. Wei ant : 

Q. Would it not be well to insert in the policy a clause giving 
them the legal right to demand it ? A. It is in most of our policies. 

Q. Do you mean to say they are non-forfeitable ? A. Nearly all 
of our policies have a protective provision in them for the benefit of 
the policyholder; they are protective provisions which guarantee the 
value in case the policy is given up. 

By Mr. Moody : 

Q- You stated that you have several kinds of policies? A. Yes, 
sir. 

Q- Give a statement of the different kinds? A. We have life 
policies and endowment policies. 

Q. State how this is rendered non-forfeitable, or what there is in 
regard to the forfeiture of the policy ? A. I cannot state that with¬ 
out seeing the policies bef ore me ; I can only say there are protective 
Clauses in them guaranteeing the rights of the policyholders. 

Q. Give the names of the different policies? A. "We have the life 
policy that is the ordinary life policy—the endowment, the ten year 
and the Tontine. 


57 


By the Chairman : 

Q. Will you state the character of the respective policies? A. The 
life policy is a policy on which the person insured pays a regular 
annual premium throughout life, and the surplus premium is returned 
•either in a reversionary manner, and this reversion may he used for 
the benefit of the policyholder in a variety of ways, such as he may 
direct; the next, the ten year policy, is where the party pays for ten 
years, and if he gives up at the end of two years he secures two- 
tenths of the policy; and if at the end of three years he secures 
three-tenths in the same way, and so on ; in the endowment policy 
lie receives a certain endowment at the end of twenty years, and if 
he pays two payments he secures one-tenth, and in five payments 
one quarter, and so on. 

Q. So that he may stop at any time and receive a paid-up policy 
for what he has paid ? A. Yes; after two or three payments. 

Q. Now as to your Tontine plan? A. That is an ordinary life 
premium, in which the party enters into an obligation with the com¬ 
pany that he will waive the right to the surrender value in view of 
the profits being accumulated and being divided among those who 
.•survive a certain length of time. 

Q. And in case of death ? A. In case of death the policy is paid. 

Q. You insure a certain number under these policies; how high 
in regard to amounts; or is there a certain number that you insure 
that way, selecting them in regard to liability and risks ? A. We 
issue for any amount they desire, either $1,000, $5,000, or $10,000, 
as they may wish. 

Q. And then they are divided into classes? A. Yes, sir. 

Q. And the statutory provision in regard to non-forfeiture would 
prevent the company’s making such contract ? A. Yes; these 
policies are selected by a class of men who would, perhaps, not insure 
their lives at all; the object of life insurance is, that a certain 
amount should be paid to the survivor in the event of death; now 
in justice to the public and the company I would say, if you make the 
surrender of a policy easy, if a man can go into an insurance company 
like going into a savings bank, and say, here I want to sell you my 
policy, and get a certain value for it and then go and spend it,the object 
•of life insurance will be lost; the object is, that the money shall be 
paid to the company so that the widow or representatives of the de¬ 
ceased may receive the amount insured for at death ; if you put in a 
penalty that is going to compel a man to pay his premium he is 
more likely to keep them up, but if I could go into a life insurance 
company and draw out the value of my policy like I could draw it 
•out of a savings bank, without loss to myself, why, good-bye to a 
man paying for a long term of years for a life insurance, and good¬ 
bye to any thing being left to the survivors; if I make a contract 
with A B, make it in good faith, make my provision and spend my 
money on the contract, as a life insurance company does, that con¬ 
tract should not be broken without a penalty being enforced; a life 
insurance company cannot break its contract under any circumstances, 
and if you are going to make it easy for any policyholder to break 
his contract, you are going to do a great injustice to the companies; 


58 


on the contrary, the breaking of all those contracts ought to be 
made as difficult for him as for the company to do so ; if I insure a 
hundred men and seventy-live become impaired in health, under that 
system the good men have every facility for going out, while the 
bad men are left on my hands, and that will as certainly bring disas¬ 
ter on any company as that two and two make four; you have got 
to exercise great care in protecting and nourishing life companies, 
on the principle that a man cannot enter contracts and voluntarily 
break them without injury to himself, as without such a provision 
there is no security for a company; if you are going to give them 
the right to break their contract, give us the same chance; but, so 
long as we are held by the severity of the law, there ought to be a 
penalty imposed if others break their contract with us, otherwise 
we are ruined by that course; you make it easy for policyholders 
to go out, and you have the debris on your hands ; you find small 
companies fail, but not one of those which are justly called large 
and respectable companies has ever failed in a million, and all this 
fright and excitement now existing is because a few ill-managed 
companies, that have taken bad policies and held too many notes, 
have failed; a great deal can be said on this subject, and the large 
companies are very much in favor of a proper system of law, but I 
don’t believe we are going to get it without great care and calmness 
and deliberation, and it won’t be done unless people take their time 
in doing it. 

By Mr. Weiant; 

Q. Do you understand that legislation is being asked that policy¬ 
holders may break their contracts? A. No, sir; I merely offer it as 
a suggestion for discussion, 


By Mr, Lang : 

Q. Do you not think it is possible to legislate to protect the policy¬ 
holder, and still be just to the insurer, to the effect that in case his 
policy becomes forfeited, in case the same facts which now forfeit 
them should come about, that he should have a paid-up policy for 
such an amount as he by equity may be entitled to ; I do not mean 
to refund the money, but to give him a paid-up policy for such an 
amount as the surplus coming to him on his life insurance should 
buy, would it not be well to do that, in your judgment ? A. I 
think a fair law on this subject, well considered, and well discussed 
would be a very wise thing; I would like to say one thing; I should 
very much doubt whether, after all, you could go to work and make 
laws on this subject; and whether you would dare to make laws that 
would be as favorable as the customs and practices that exist on the 
part, of the companies for the protection of all interests ; they are 
flexible and adapted to all circumstances; we would not dare to have 
them a cast-iron rule or law; but there is nothing that will make 
them so liberal to the policyholders as the reputation they must have 
for liberality, honesty, and fair dealing, in order that they may do 
business in the future; it is impossible for a life insurance company- 
with a blighted name to do business. 1 J 


# 


59 


By Mr. Weiant : 

Q. You stated your company was doing business in Massachusetts? 
A. Yes, sir. 

Q. Are the policies you issue there the same as those you issue 
here? A. Yes, sir. 

Q. In the form of a contract? A. Yes, sir. 

Q. "I on don’t issue your policies there under the Massachusetts 
non-forfeiture law ? A. They are issued in New-York. 

Q. Do I understand you to say you could safely do business and 
issue a non-forfeiture policy similar to that, in principle, used in 
Massachusetts? A. Well, sir, I think there are grave objections to 
the Massachusetts non-forfeiture law. 

Q. In what respect ? A. Objection that it is injurious to the policy¬ 
holders. 

Q. Will you state wherein ? A. I could, perhaps, hardly do so at 
this time; I could prepare a paper on the subject. 

Q. Give us your idea wherein it is injurious to the policyholders ? 
A. I can state this, for an illustration : I can take one point; suppos¬ 
ing, for example, a man had a policy and had to pay his premium on 
it, say to-morrow, or three months from now, and a law was passed 
that he should not pay his premium until tw r o years from now ; it 
would be an exceedingly embarrassing and wrong thing to the com¬ 
pany, and a damage to the policyholder ; I am not opposed to a wise 
law’ passed for the protection of the policyholders; but it would be 
unwise for me, in this interview, to lay down my views as to non¬ 
forfeitable laws ; I would not trust myself to make a speech, but 
would only trust myself to read a paper. 

Mr. Moody —You have had this matter under consideration, you 
say, for twenty-five years; we come here not having had it under 
consideration two or three months ; how are we to arrive at a decision 
on the matter except from such men as you are ? 

Mr. Hale —I venture to say if this committee would become 
acquainted with the officers of a large life insurance company, and 
have confidence in them, that they would have confidence in them, 
that they would be honest and act fairly, laws could be made that 
would be fair all around. 

Witness —I have been in it twenty-five years, and have devoted 
my life to it, and I say here distinctly that any life insurance mistake 
is worse than a crime; it would be very easy for the committee to 
draft and the legislature to pass a law that would be a great dam¬ 
age to the institution in the State; so far as the officers were 
concerned they will go to any extent to serve the committee or the 
House. 

By Mr. W eiant : 

Q. Let us suppose a man has taken out a life policy for $10,000, 
and, after having paid the premium for ten years, finds himself in 
embarrassing pecuniary circumstances, and cannot pay up the pre¬ 
mium, what have you to say about the passage of the law that he 
should be protected for the money he has paid ? A. I have no ob- 


60 


jection to it, and am in favor of proper protection, so far as you 

St Q.' Don’t you think that his rights should be properly protected l 
A. I should think he should be properly protected. 

By Mr. Lang : 

A. I want to ask you whether, in your judgment, it would be wise 
to put a restriction in the way of an individual being secretary an 
vice-president of one company and general agent of another and by 
such swapping around business, for instance, as theie was be ween 
you and that Boston man having a double salary, you understand 
the point, whether it would be wise to prevent such a thing as t la 
A, I am perfectly willing to sacrifice myself on the altar of the 

public good. 

Recess till 3.30 p. m. 


Afternoon Session —3:30 p. m. 

The examination of Mr. Hyde was resumed by Mr. Moak : 

Q. This building, called the Equitable building, in New-York, 
about what is its front on Broadway ? A. Eighty-nine feet, sir. 

Q. And about what is its depth on the cross street ? A. About 
225 feet. 

Q. Its bight is how many stories ? A. It is about eight stories 
high. 

Q. About what proportion of the building is occupied by the in¬ 
surance company itself? A. From a quarter to a third. 

Q. Is the remainder of it substantially rented now ? A. Almost 
' entirely rented. 

Q. This company is a company started with a capital stock, I be¬ 
lieve? A. Yes; at the time we organized we were obliged to com¬ 
ply with the laws of the State of New York and have a capital 
.stock of $100,000. 

Q. You started, then, with a capital stock of $100,000. A. Yes. 

Q. And what is the market value of that stock now ? A. I think 
the market value of that stock is a little rising of $150 per share of 
$ 100 . 

Q. Does it not stand as high as four or five hundred ? A. There 
was an occasion, about four or five months since, when some of the 
stock was offered at auction ; we became satisfied that parties, whose 
motives were at least questionable, and opposed to the interests of 
the policyholders, proposed to buy the stock, for the purpose of ac¬ 
quiring it to injure the company, and it was bought in the interest 
of the company to protect the company from the assaults and mach¬ 
inations of persons hostile to the company. 

Q. How much was it bought at ? A. I think four hundred. 

Q. By whom was it purchased ? A. I think it was purchased by 
Mr. Hosea Navarreau. 

Q. On his own account ? A. It was bought on his own account, 


t 



61 


for delivery to some officer in the company, for the interest of the 
company. 

Q. Was it designed to be paid for by the company’s funds? A. 
No, sir. 

Q. Was there any design that it should be owned by any individ¬ 
ual in the company, but for the company ? A. No, sir. 

Q. How much stock was there sold tliat way ? A. I think $1,000. 

Q. He purchased it, and what became of it subsequently? A. It 
was subsequently transferred to myself, and I now hold it. 

Q. In your individual capacity ? A. Yes. 

Q. And paid for by your individual funds? A. Yes, sir. 

Q. In other words, he bought it for you? A; Yes. 

Q. Has there been any other stock sold or offered on market with¬ 
in the past two years? A. Yes, sir. 

Q. When is the first time within the past two years? A. Perhaps 
once or .twice a year. 

Q. What was the price at which it has been sold usually ? A. It 
has been sold from $150 to $195, as near as I can remember. 

Q. When did the company make its first dividend? A. In 1864. 

Q. What was that dividend to its stockholders? A. Its dividends 
then were to its policyholders; it has only paid a few dividends to 
the stockholders. 

Q. How much was the first ? A. Seven per cent in gold. 

Q. How much was the second? A. Seven per cent in gold. 

Q. What is the interest declared and paid to stockholders? A. 
Seven per cent in gold. 

Q. Has there been any dividend paid to the original stockholders 
exceeding that ? A. They cannot receive, according to the charter, 
a higher rate than that; the charter is explicit. 

Q. Has there been any surplus set aside as property of the share¬ 
holders or reserve to the shareholders? A. Not a dollar. 

Q. Has there been any addition to the original capital stock, or, 
in other words, to use a homely phrase, has it been watered or in¬ 
creased in any way? A. No, sir ; there has not, in any way, shape 
or manner, past, present or contingent, been any other advantage 
given to stockholders other than the seven per cent. 

Q. Of how many directors does the company consist ? A. Fifty- 
two. 

Q. Are they all chosen by the stockholders? A. Yes, sir. 

Q. Assuming that all the stockholders should act in unison, what 
is the smallest number that could control the concern in the manage¬ 
ment of directors—assuming the large shareholders combined, how 
few of them could control it? A. It would take quite a large num¬ 
ber ; no one person controls it. 

Q. Would it take half a dozen? A. I should think more than 
that. 

Q. Would it take a dozen ? A. Whatever it might be ; it would 
be so?newhere in that neighborhood. 

Q. Well, how much do you own? A. I own of stock in that 
company about $28,000 worth. 


/ 


62 


Q. Do you own a little over a quarter yourself, then ? A. Yes, 
sir. 

Q. Are you the largest shareholder? A. Yes, sir. 

Q. Who is the next largest? A. I think Mr. J. W. Alexander 
holds about $12,000 worth. 

Q. Who is the next largest ? A. I think, Mr. Henry Day. 

Q. How much does he hold ? A. I should think about $3,000 or 
$4,000 worth. 

Q. You think he is the next largest shareholder to Mr. Alexan¬ 
der ? A. I think he owns about the third largest number; he owns 
about $3,000 or $4,000 worth. 

Q. Do you think he is the next largest to Mr. Alexander ? A. I 
think he is; I am not positive; all these sums are estimates; I am 
not absolutely certain. 

Q. Are there several stockholders owning from $3,000 to $4,000 
each? A. Yes; I think—my impression is—that after tjiat it is 
held in very small amounts it is held in amounts of from $500 to 
$1,000 ; small amounts chiehy. 

Q. Is there any stock held by any member of your family, except 
the amounts you hold ? A. Ho, sir. 

Q. Is Mr. Alexander’s stock held by himself, or is there any of it 
held by any member of his family ? A. I think lie has some held 
by his uncle. 

Q. About how much ? A. I realty cannot say. 

Q. Among the directors, is there any person, after you leave out 
Mr. Day, and, I think, you named him as owning $3,000 or $4,000, 
who owns $2,000 worth of stock ? A. I think there are. 

Q. Who are they ? A. I think Mr. R. S. Kennedy owns as much 
as $2,000 worth. 

Q. Does he own more than that ? A. It is possible he owns $2,- 
500 worth; I am not certain. 

Q. Is there any other person who owns as much as $2,000 worth ? 
A. I don’t now recall. 

Q. Do you recall any that own as much as $1,000 worth ? 

A. Yes, sir; many of the directors own as much as $1,000 worth 
and $500 each ; it is largely distributed among the directors of the 
company in sums from $500 to $1,000 each. 

b Q. You, with twenty-eight shares, Mr. Alexander with twelve, 
would make forty, Mr. Day with three would make forty three, and 
this gentleman with two would control $45,000 worth of the stock 
of the company ? A. Yes, sir. 

Q. You say the directors are selected by the stockholders of the 
concern ? A. Yes, sir. 

Q. The insured have no voice in the selection ? A. Ho, sir. 

Q. About how much is the value of the entire assets of the com¬ 
pany, exclusive of the real estate; I mean to include in that what is 
secured by mortgage on real estate, but to exclude that of which the 
company has the title ? A. You don’t mean to include the mort¬ 
gages ? 

Q. I mean to include all the assets of the company except the real 
estate, of which the company has the absolute title? A. Well, the 


63 


real estate is about five and a-lialf millions; our bonds and mortgages 
are about seventeen or eighteen millions. 

Q. Have you any other assets; give me the assets of the company, 
exclusive of the real estate of which you have the absolute title ? 
A. Then the assets of the company, figured in that way, would be 
in round numbers, about twenty-live millions, taking five and a-lialf 
from thirty-one and a half. 

Q. T our entire assets, including real estate, is about thirty-one 
and a-half millions ? A. Yes. 

Q. And you value your real estate, including the Equitable build¬ 
ing, and the real estate that you have the title to m consequence of 
foreclosures of mortgages, at live and a-half millions? A. Yes, sir. 

Q. Then that would leave your assets at about twenty-six millions ? 
A. ^ es, sir. 

Q. How is that invested ? A. We have invested about eighteen 
millions in bonds and mortgages, six millions invested in State and 
city stocks, deferred premiums and amounts due from agents ; but 
these statements will very shortly be in your hands. 

Q. How much have you in State and United States bonds? A. I 
really could not give you the precise figures. 

Q. I do not ask you for the precise figures ; approximate it ? A. 
I could not give you the precise figures. 

Q. How much of these $18,000,000, secured by bond and mort¬ 
gage, is secured upon real estate in the city of New York, or what 
proportion of it ? A. Well, in New York and Brooklyn, I should 
say, at a rough estimate, about three-quarters of it. 

Q. The balance of it is spread throughout the State or in New 
Je sey, within a radius of fifty miles from the City Hall of New 
York ? A. Yes. 

Q. And the annual income of the company, as I understood you 
to say, last year was about nine millions ? A. Yes, sir. 

Q. Have you any other assets other than the thirty-one and a-half 
millions that you have spoken of ? A. That is the total assets of 
the company. 

Q. Do you take premium notes? A. No, sir. 

Q. Then how does it come, Mr. Hyde, that your entire assets are 
less than four times the income ? A. It is because we are a very 
young company, and it is an anomaly that a company so .young as 
ours should accumulate so much money ; we were organized eighteen 
years ago, and it is on account of the short number of years this has 
been accrued in: it would take another company a much larger time 
to accumulate that amount. 

Q. Has this large amount of assets been accumulated in the brief 
time by ordinary business management of the company ? A. Yes, 
sir. 

Q. To what do you attribute the extraordinary success? A. I 
attribute it to well directed, skilful efforts that have been made 
during the time, and that have been used with extraordinary vigor, 
by which we were enabled during that period (ending, I think, with 
1874) to transact more business within five years than any company 


64 


in the world; it is owing to the extraordinary exertions made and 
skilfully directed that that result has been obtained 

Q. About what was the amount of insurance which became due- 
from loss of policies last year? A. Roughly, about $2,000,000. 

Q And you say that with reference to what it was the year before, 

1875? A. I think it was about the same, sir. 

Q. For how many years will it average about the same ? A. it 
would average, of course, on a declining scale, accoiding to the 
youth of the company; I don’t think in life insurance companies 
the mortality should he gauged year by year ; one yeai is a short 

time. . , 

Q. Taking it for the year 1875 you think it would be about the 

same ? A. Yes, sir. 

Q, And for 1874? Approximately less. 

Q. How much less ? A. I can’t tell you; some years we might 
have misfortune; there might be a serious epidemic raging; in 1875 
pneumonia existed to a remarkable extent; it is probably the most 
deadly disease, so far as life insurance is concerned, w r e ever had ; we 
are not afraid of cholera. » 

Q. About what is the loss, in reference to 1875, for the year 1874 1 
A. It w r as on a declining scale, according to the youth of the com¬ 
pany ; I cannot give the exact figures. 

Q. Give as near as you can"? A. Well, suppose you call it a 
million and three quarters. 

Q, Of those $2,000,000, do you think it would cover the aggregate- 
of the losses last year ? A. I cannot tell without the papers before 
me. 

Q. 1 ask you what you think ? A. It is a rough estimate of the 
loss, sir. 

Q. Do you think it would cover it ? A. I think it is a fair esti¬ 
mate of the loss. 

Q. About what proportion of them was paid without litigation ?. 
A. Our litigation was exceedingly fractional; at a rough estimate, 
I don’t believe we have had, for years past, more than three or four 
cases each year; it is a very rare thing for us to have litigation 
about death losses. 

Q. You don’t think it exceeded three or four cases each year? A. 
I should think not. 

Q. And that upon policies not exceeding $5,000 or $6,000 each l 
A. Yes; I don’t think we have contested as many as we should. 

Q. You say you had, last year, invested about $18,000,000 in 
bond and mortgage; upon what proportion of that was the interest 
paid, or on substantially what proportion was the interest paid 
promptly, or at the time it became due ? A. There was only a frac¬ 
tional portion of it on which the interest was not paid ; I could not 
give you the precise figures. 

Q. Give it as near as you can ? A. I don’t think the interest back 
in the company would exceed $100,000. 

Q. And about what proportion of that was paid, when it became 
due, without legal proceedings ? A. The greater portion of it. 

Q. I understood you to say the policies of the company would be 


65 


$175,000,000? A. The aggregate amount of policies issued and 
now standing out. 

Q. About how many policies, in your judgment, were lapsed last 
year ? A. I really would be unable to answer that without a very 
close examination ; all these facts we are making up at New York. 

Q. Can't you give us some idea? A. I really would be unable. 

Q. Can't you come somewhere within $300,000,000. A. I think 
an estimate as loose as that would not he of much value. 

Q. It seems to me, as president of the company, you would be able 
to give an approximate idea? A. I had no idea, when I came here, 
that I should be able to give as many correct estimates as I have. 

Q. In other words, there seems to be an idea, whether well found¬ 
ed or not, that insurance companies have been in the business of 
lapsing policies as much as possible? A. No, sir; I will state this, 
I will give the fact whatever the result may be; the fact is, we ap¬ 
proach men and ask them to pay up their premiums; if a man has 
a premium six months past due and should write to us we should 
give him every opportunity to pay it. 

Q. You would not do it without another examination, would you? 
A. No, sir; we take the intention of a man to pay his premium; I 
once had a man telegraph our agent from Philadelphia that a man’s 
premium was past due a day, and his relatives wanted to pay it; I 
telegraphed back take it; they telegraphed me he was dying, and I 
telegraphed back ‘‘take it;” he died, and we referred to his check¬ 
book and found that he had drawn a check to pay it; we afterward 
found that he had been suffering from heart disease for about two 
weeks, and had been unable to send his check around. 

Q. That is an exceptional case ? A. That was an exceptional case ; 
this man had paid his premium for four years, and intended to do so 
regularly ; if we are satisfied that a man intends to pay his premi¬ 
um, and his not doing so was an oversight, we allowed him to do it; 
we cannot give a man the option to say, I will not pay the premium 
when it is due, and six months after say, I will pay it; but we do 
take it with interest upon re-examination. 

Q. Has your company paid anything to any one, directly or indi¬ 
rectly, for the purpose of procuring the lapsing of policies ? A. No, 
sir; we sometimes send two notices to the people without they re¬ 
fuse to pay the premium, drawing their attention to the fact that the 
premiums have not been paid up, and where we have charge, we 
consider the city of New York our own agency, we have repeatedly 
notified persons who have allowed their premiums to run past. 

By the Chairman : 

Q. Some of the companies give the option to policyholders of tak¬ 
ing a paid-up policy in case of their policies lapsing; is your compa¬ 
ny one of those companies ? A. As I stated this morning nearly all 
our policies have a protective clause of the severest character for the 
protection of the insured. 

Q. Have you a blank policy with you ? A. No, sir. 

Q. Will you send one when you return ? A. Yes, sir. 


66 


Q. A copy of all your policies? A. Y es, sir. 

By Mr. Moak : 

Q. Has your company, at any time, borrowed any money of any 
other company, association or person ? A. 1 l es, sir ; we have. 

Q. To what extent? A. We have borrowed money sometimes 
from the banks, at the end of the year, for the purpose of making 
our investments very close ; the premiums came in after the first of 
January and we very much dislike reporting a large amount in the 
bank; sometimes, when we can get our money well out in bond and 
mortgage, we borrow from the bank and put it out when we have 
an opportunity, and repay it afterward. 

Q. Say for the last year how much was done that way ? A. I don’t 
think it was done at all last year. 

Q. Well, in the last two years ? A. We might possibly have done 
it a year or two ago; there was a time when there was a great de¬ 
mand for money on bond and mortgage, but the last eighteen months 
there has not been ; in the city of Hew York, perhaps twice in a 
year there will be a great demand for money on bond and mortgage 
and then again times when there is no demand ; we have acted wise¬ 
ly in getting all our money out wdien opportunity presented itself. 

Q. Has your company loaned any other company money during 
the last five years? A. Ho, sir. 

Q. Has any one loaned the assets of the company to any other 
company or association ? A. Ho, sir. 

Q. And has any been loaned by either the officers of the company, 
or by any one, except in the usual way, upon bonds and mortgages 
or on bonds ? A. Ho, sir ; none at all. 

Bv Mr. Weiant : 

*/ 

Q. Have any of the officers borrowed on behalf of the company ? 
A. Ho, sir. 

Q. At any time ? A. Ho, sir. 

Q. Has the company used the individual funds or assets of the 
directors? A. Ho, sir. 

Q. In making up its reports or accounts? A. Ho, sir. 

Q. At no time ? A. Ho, sir. 

By Mr. Moak : 

Q. Are any of the officers indebted to the association now at this 
time? A. Ho, sir. 

Q. bay for the past six months, what has been the value of the 
cash items of the company; I don’t mean bonds, but what is usually 
regarded as cash items ? A. I don’t know what you mean by that. 

Q. I mean money in the bank that would be readily available, in¬ 
dependent of bonds and mortgages? A. Well, sir, we have a large 
amount in bank, sometimes a million or a million and a half of 
dollars; we have no cash items; during the construction of the 
building we have had accounts that have been in the banks, that 
have been in an unsettled condition and that may possibly have been 
considered as cash items. 


67 




Q. I confined it to the past six months, so as to get rid of the 
construction of the building ? A. We have no cash items. 

Q. How much have you had in the bank for the past six months ? 
A. We have variable amounts, from half a million to a million and 
a half; sometimes we despair of getting the money out on bond and 
mortgage, and we think we will make more money by keeping the 
money in bank at three per cent than we can make by governments, 
and possibly we can make more money by governments than if we 
wait. 

Q. \ our bank account, then, you think, has varied from a million 
to a million and a half ? A. That is a rough estimate. 

Q. Have you had any available funds that could be readily realized 
by the officers in case of an emergency ? A. Yes, sir. 

Q. Independent of the bonds and mortgages? A. Yes, sir; we 
have registered bonds, and some coupon bonds, which we dislike to 
buy; we endeavor to have all our securities registered. 

Q. When money is paid out by the company, what is the method 
of paying it out ? A. It always goes to the finance committee first, 
and secondly to the two officers. 

Q. Suppose you presented a check to the bank, by whom would it 
be signed ; or, in other words, if your association was drawing a 
draft on the bank for $10,000, by whom would it be signed ? A. By 
two officers. 

Q. What officers ? A. Any two officers; by officers I mean the 
president, vice-president, secretary, or actury, or the chairman of the 
finance committee. 

Q. Two of either of those could draw any amount ? A. Yes, sir; 
they are competent to draw money out of the bank. 

Q. Any amount you choose to draw ? A. Yes, sir. 

Q. You say it requires the action of the finance committee; is 
there any thing to indicate to the bank upon which you draw that 
that action has been taken, except the signature of the two officers ? 
A. No, sir. 

Q. Nothing whatever ? A. No, sir. 

Q. So that if to-morrow your assets were a million and a half, 
and a check should be presented, signed by yourself and either of the 
other officers of the association, that amount would be paid upon the 
check ? A. Yes, sir. 

Q. Is there any direction to the bank, or any instructions which 
forbid there paying an unlimited amount upon the check of the two 
officers of the company? A. No, sir. 

Q. Do you keep your bank account in one bank or more than one ? 
A. We keep our bank account, I think, in four or five banks. 

Q. What is the largest amount you have on deposit in either one 
of them, say when your current cash on hand is a million and a half 
dollars in bank ? A. Well, we rarely exceed $200,000 in any bank; 
we keep our money in the trust company; and if we have a large 
amount on hand we endeavor to put it into governments, if it is bet¬ 
ter so to put it. 

Q. Won’t you specify the banks? A. The Park Bank; the Her- 


68 


9 


man-American Bank; the Metropolitan Bank; and the Bank of 

OoniniGrcc « 

Q. Now let me ask you a question as a matter of prudence 01 

legislation : suppose to-morrow you should happen to drop away and 
they should get a dishonest president, and a secretary who should act 
with him, and he could draw $1,000,000 out of the hank, and go 
where he pleased, would you not regard it as a matter of prudence 
to provide, but not above a certain amount to be drawn out, except 
on the signature of all the officers? A. I see no objection to it. 


By Mr. Husted : 

Q. Does not the president of the Bank of Commerce do that ? 
Al Yes sir. 

Q. It has been the established financial rule for years, has it not ? 
A. Yes, sir. 

By Mr. Lang : 

Q. What has been the established rule? A. The one 1 suggest. 
Q. But the bank does not see the action of the finance committee, 
does it? A. No, sir ; I have more responsibility than I like. 

By Mr. Moody : 

Q. Do you keep an account of the policies that lapsed by non¬ 
payment of premiums? A. No, sir. 

Q. There is no account kept of the amount of the policies? A. 
No, sir. 

By Mr. Husted : 

Q. You know the amount of those that have lapsed ? A. Yes, sir. 


By the Chairman : 

Q. Do you have a larger number lapsed by good lives thinking a 
continuance of the policy unnecessary, or by the reason of impaired 
means ? A. I think there are a variety of causes which induce per¬ 
sons to lapse their policies; the excitement which exists at the pres¬ 
ent moment is the most exciting cause. 

Q. That is not the result either of the causes to which I allu¬ 
ded ; I asked you whether you thought the greater number lapsed by 
reason of the healthy persons finding it unnecessary or inconvenient 
to continue their insurance, having more uses for their money, or by 
reason of people failing to continue by reason of scanty resources ? 
A. Well, sir, you may, perhaps, divide that up into two sections; 
the improvident man may be improvident in his money and in his 
health; a man who is careless of his health is careless of his money, 
and the class of men that give up their policies are made very 
largely by the class that are careless of their health, and give 
very little attention to it; some of them that are in bad health 
give up their policies as well as those in good health; there is 
no general rule about it, but you will find by a thorough 
investigation, that in the class of policies given up the best 


69 


lives predominate; this argument was brought forward in favor 
of protection to the company, because a company in which the good 
lives step out, leaving the bad lives in the company will be ruined. 
ri Q- Pecuniary misfortunes are not the cause of such result? A. 
There are two classes that lapse their policies; one in good health 
goes out, and the other thinks the company is in bad odor and bad 
repute, and they will sell out their policies and get rid of them in 
some way, and insure in another company, it works both ways. 

Q. Do you think the larger number that withdraw are men in 
good health? A. Yes, sir. 

^ Q. Rather than from pecuniary weakness or inability to pay ? A. 
les, there is no question about that; the lapses that take place in a 
company are the best lives, and for that reason we need very careful 
legislation for the protection of the company in that respect. 

By Mr. Husted : 

Q, Don’t a great many men get insured for a large amount for the 
purpose of using their policy to borrow money with, and when the 
tide goes over and they don’t need to borrow money, they lapse their 
policy ? A. Yes, sir; a great deal of that is done. 


By the Chairman : 

Q. What is the maximum for which you take an insurance ? A. 
The largest amount we take is $50,000 on a single life. 

Q. With many companies, the maximum is less, is it not ? A. 
Yes, sir. 

Q. Do you think it good policy to take such large risks ? A. 
Well, sir, if I may use the figure, the risk of a company is like a 
pyramid, the base of it rests upon the small policies; it gradually 
rises to the apex at the risk of $50,000; it is supported all the 
way along by risks of $20,000, $25,000, $30,000, $35,000, $40,000, 
$15,000, and the highest sum is $50,000; so it is, on the doctrine of 
chances, perfectly safe for a large company to do it ; for a large 
company like the Equitable to take a $50,000 to-day is a great deal 
less than when we took a $10,000 policy with a capital of $100,000; 
in $50,000 policies we use the greatest care, and they are examined 
by three physicians; the circumstances of the man are looked into, 
and we don’t take it unless we have a personal knowledge of the 
man. 

Q. Do any other companies take as large a risk as that ? A. I 
could not tell you ; our experience in large policies has been for the 
last years very favorable to the company. 

By Mr. Moody : 

Q. You say you only make dividends of seven per cent in gold ? 
A. Yes, sir. 

Q. What becomes of the other profits ? A. They belong to the 
policyholders. 


70 


By Mr. Husted : 

Q. They are paid in dividends on policies? A. Yes, sir. 

Q. Or in cash surrender values ? A. Yes, sir. 

By Mr. Wei ant : 

Q. With reference to the manner of making loans on real estate, 
won’t you give the history of the manner in which you make the 
loans ? A. A person applies to the office of the company— 

Q. Who are the officers of the company he applies to ? A. He 
applies to the superintendent of the bond and mortgage department, 
and says, I want to borrow so much money on a piece of property; 
he makes out a description on the blank and gives the names of the 
bondsman, and then signs it; generally the officers of the company 
look at it to see if it is within the rules of the company. 

Q. Who are the officers ? A. The president, vice-president, or any 
of the officers; they view it to see if it is within the rules of the 
company that we should make the loans; if it is a factory or planing- 
mill, or a dozen different kinds of property that we don’t loan on,, 
we dismiss the thing; if it is not, then it is sent to the appraiser 
in the locality where the property is located, to value. 

Q-Outside the county the appraisers are appointed by whom? A. 
Outside the city by the finance committee. 

Q. Of the company? A. Yes, sir; when the appraisal comes in 
if it is favorable, the loan is made from thirty to fifty per cent of 
the extreme of our own valuation. 

Q. Have your officers any knowdedge of what takes place between 
the appraisers and attorneys of the persons who wajit to make the 
loan ? A. I don’t see how they could ; they never meet; they never 
come together. 

Q. Do you know that of your own knowledge? A. Well, there 
is no necessity for it; the person who borrows the money meets the 
attorneys of the company, but the broker who interferes in the first 
instance does not; the person who borrowed the money goes to the 
attorney under our attorney and there makes the proper arrangements 
to have the title searched; the appraiser has no logical connection 
withthe officers of the company ; there is no reason why they should 
meet; they may meet possibly, but taking a business view of it 
there is no need for them to meet. 

Q. You employed the attorneys to make the search ? A. Yes, sir. 

D. But that you don’t pay for ? A. Ho, sir. 

Q. You don’t know that they do not meet ? A. Ho, sir. 

. Q- Or what negotiations might take place between them ? A Ho 

sir , 


Q. Does your company make it its business to know what takes 

place between the borrower and the person who makes the search l 
A. 1 es, sir. 


?° A° U \/ )erm ! t ^ ie attori ? e .y s ma ke their own charges for the 

m f 4' T -l eS ’ Sir ’ WG ’ in tliat res P ect we different from 
the Mutual Life; persons borrowing money from us pay the attor¬ 
neys foi their trouble; they pay them the usual market price that 
lawyers usually charge. 1 


71 


Q. Do you know what it is ? A. It is from a-half to three-quarters 
per cent on whatever the amount may be. 

, Q* Of th&t matter you have knowledge? A. Of that we are cog¬ 
nizant ; we would not allow the attorneys to charge an unjust price. 

Q. \ ou only know what you are informed by the attorne} r s ? A. 
If there is anything going wrong in that department, I think, owing 
to the peculiarity of the American people, we should know it; we 
should be sure to hear of it. 

Q. Do you go about the country, among the people who make 
loans, to hear ? A. We h ve a book of complaints, and people are 
ready enough to complain; sometimes they complain if they are 
charged anything. 

By Mr. Hale : 

Q. 1 ou have a committee on grievances? A. Yes, sir. 

By Mr. Weiant : 

Q. Do you give notice that they are only permitted to charge a 
certain amount, or give them any notice whatever? A. We give 
notice to the attorneys that they should not charge over and above 
certain rates. 

Q. Do you give notice to the borrowers? A. We do, when asked 
with regard to it; I cannot say we spread out all the rules for the 
government of the lawyers and ourselves on the notice that the loan 
has been passed. 

Q. Are you prepared to say the attorneys do not charge more than 
a-half per cent ? A. I am prepared to say, from knowledge, that 
our attorneys do not charge more than the usual rates that are charged 
by most respectable law firms for the examination of titles. 

By Mr. Moak : 

Q. It seems to me, on the statement of facts you have presented, 
you are running a great risk; suppose he charges a-half per cent, 
don’t you run the risk of usury ? A. No, sir. 

Q. The attorneys act for you ? A. He acts for the company so 
far as the loan is concerned. 

Q. And so far as taking the money ? A. Well, it has been cus¬ 
tomary from time immemorial. 

Q. Are not borrowers, in this way, compelled to pay more than 
seven per cent ? A. We are loaning at six per cent now. 

Q. But the borrower, by reason of these additional charges of the 
attorney, is compelled to pay more than seven per cent, and may be 
as high as fifteen, may he not ? A. No, sir; I guess not. 

Q. You know it is not so? A. I know they do not. 

Q. You know they do not pay to the attorneys? A. Yes, sir; I 
am willing to swear, to the best of my knowledge and belief, that this 
business is conducted in the way that I have stated; of course, I am 
not present at these times, but I really think there is no trouble in 
that direction ; they only charge the usual rate. 


72 


John R. Hegeman sworn. 

Hon. Stewart L. Woodford —On behalf of the Metropolitan Life 
Insurance Company, and as its counsel, I desire to present the fol¬ 
lowing letter, which I will put on the record, explaining any appar¬ 
ent discourtesy in not sending the jiapers here before. The letter is 
as follows: 

Metropolitan Life Insurance Company, ) 

Corner Park Place and Church Street, > 

Hew York, March 19, 1877. ) 

Hon. James Graham, Chairman of the Insurance Committee of 

the Assembly , Albany , N. Y .: 

Dear Sir. —In obedience to your summons of March thirteenth, 
and pursuant to a resolution of the Assembly, March twelfth, calling 
upon the officers of certain life insurance companies—including the 
Metropolitan—for a “statement, under oath, of the amounts paid in 
salaries, fees, compensations or donations to their respective presi¬ 
dents, vice-presidents, secretaries, medical examiners, attorneys, coun¬ 
selors, and other employes for the year 1876,” we beg to submit, 
after disavowing other than motives of the highest respect for your 
honorable body, that by the recent transfer of Mr. Robert A. Gran- 
niss from the secretaryship of the Metropolitan to the second vice¬ 
presidency of the Mutual Life, we are at this time without a secreta¬ 
ry ; further, that the duties of our actuary, Mr. Stewart, are quite 
exclusively among the agents in the field and not at the home office, 
and that these facts impose the official administration of the com¬ 
pany, at this juncture, upon its president and vice-president. 

The absence of the two, at the same time would be prejudicial to 
the company’s interests. 

We have, therefore, taken the liberty of respectfully presuming 
that a substantial, rather than a literal, compliance with the mandate 
of the Assembly would be acceptable to your honorable body, and, 
in this spirit, we beg to hand you herewith, at the hands of the 
company's vice-president, a sworn statement covering the facts called 
for by the resolution, which, we trust, will be entirely satisfactory. 

If it shall not, however, be deemed to be in accord with the senti¬ 
ment of your committee, we shall take pleasure in responding to the 
further expression of their views. 

Believe me, gentlemen, 

Yery respectfully yours, 

JOSEPH F. KHAPP, 

President. 


Governor Woodford— Our company has filled in the blanks sent 
by Mr. Smyth, then Acting Superintendent of the Insurance De- 


73 


partment, which will answer the question asked, the detailed state¬ 
ment of which I will read. It is as follows: 

Detailed Statement of Salaries and all other fees , Compensation , 
or Donation paid to Officers , Medical Examiners , Attorneys , 
Counselors and all other Employes of the Metropolitan Life 
Insurance Company , during the year 1876. 

Amount of salary paid to president during the year, . $6,000 00 

Amount of all other fees, compensation or donation, if 

any, paid president during the year (com. account), . 8,338 50 


Amount of salary paid to each vice-president during 

the year, being one in number, . . . $6,000 00 

Amount of all other fees, compensation, or donation, if 
any, paid vice-president or vice president during the 
year (com. account), ..... 3,429 37 


Amount of salary paid to each secretary during the 

year, being one in number, .... $5,000 00 


Amount of alhother fees, compensation or donation, if 
any, paid actuary or actuaries during the year (in 
com. account in company’s annual report to Insurance 
Department), ...... $4,000 00 


Amount of salary paid to medical examiners during the 
year, being one in number, to wit, chief medical ex¬ 
aminer at home office, 

Amount of all other fees, compensation or donation, if 
any, paid medical examiners during the year, to wit, 
medical examinations at the various agencies of the 
company on 4,116 policies issued in 1876 (in medical 
fee account in company’s annual report to Insurance 
Department), ...... 


Disbursements connected with the legal business of 
company for 1876 (in legal fee account in company’s 
annual report to Insurance Department), . . $4,113 91 


Average amount of salary paid to all other clerks and 
employes of the company during the year, $943, be¬ 
ing nineteen in number, .... $17,916 99 
Salaries proper, ...... 34,916 99 


$2,250 00 


11,493 00 


Average salary, etc., of president during his connection 

with the company, 1871 to 1876 inclusive, . . $9,245 00 


















74 


Average salary of vice-president during his connection 

with the company, 1870 to 1876 incusive, . • $6,300 00 


Aggregate, 


. $68,541 77 


STATE OF NEW YORK, ) ^. 

County of New Y ork. j 

John R. Hegeman, vice-president, and A. H. Creagh, acting secre¬ 
tary of the Metropolitan Life Insurance Company, being duly sworn, 
depose and say, and each for himself says, that they are the abo\ e 
described officers of said company, and that the detailed statement is 
a correct exhibit of the amount paid in salaries, fees or compensa¬ 
tion or donation to the president, vice-president, secretaries, actuaries, 
medical examiners, attorneys, counselors, clerks and other employes 
of this company during the year ending on the 31st day of Decem¬ 
ber, 1876. 

JOHN R. HEGEMAN. 

A. II. CREAGH, 

Acting Secretary. 

Subscribed and affirmed to before me, ( 
this 19th day of March, 1877. j 

H. S. Driscoll, 

Notary Public , New Pork and Kings Co. 

John R. Hegeman : 


Examined by Mr. Moak. 

Q. Were any of the officers stated in this list, the salaries of which 
are here given, paid any compensation on the basis of a percentage 
in any way, in addition to the salary ? A. They were. 

Q. State to what extent; take the president for example; did the 
president receive a regular salary ? A. He received a regular salary 
of $6,000, and he received. I believe, of the company in 1875 one 
per cent of the net income. 

Q. Which amounted to $8,338.50; A. Yes, sir. 

Q. Was he receiving at the same rate for 1876 ? A. No, sir ; the 
contract terminated at the end of 1875. 

Q. What was the arrangement as to the year 1876? A. Simply 
$6,000 a year salary. 

Q. Without any other compensation? A. Without any other 
compensation. 

Q. Is he to receive any other compensation, either directly or in¬ 
directly ? A. Nothing. 

Q. And he did not receive any thing, either directly or indirectly y 
for any alleged services, over and above his salary you have men¬ 
tioned, during the year 1876? A. Nothing. 

Q. During that year did the president have any connection with 
any other insurance companies ? A. Not any. 

Q. Either directly or indirectly? A. Not any. 








75 


Q. Either as director or agent or officer ? A. In no capacity. 

Q. Did any director in your company, to your knowledge, have 
any connection with any other insurance company ? A. Hot to my 
knowledge. 

Q. Did the president receive, either directly or indirectly, from 
any source, any money connected with insurance during the year 
1876, to your knowledge, except what is stated in the returns pro¬ 
duced ? A. Hot a dollar. 

Q. How take the vice-president; he received a salary of $6,000? 
A. He did. 

Q. And received also a per centage at what rate upon the gross 
assets ? A. He had the same arrangement with the company the 
president had, which terminated at the end of 1875, and on account 
of that he received $3,429. 

Q. Has the balance been paid ? A. There is a balance of between 
one and two thousand dollars due; that is the extent of it. 

Q. You are the vice-president? A. I am. 

Q. How long have you been connected with the company ? A, 
Since 1870. 

Q. What has been the interest you have received in any year ? A. 
Six thousand dollars. 

Q. Including the per centage? A. Yes ; it has averaged during 
that time $6,300 for sixteen hours’ work. 

Q. This statement as to the average is correct ? A. Absolutely. 

Q. During all the time that you have been connected with the 
company, have you received, either directly or indirectly, from any 
insurance company, any money except what is stated here ? A. Hot 
a dollar. 

Q. From any source ? A. Ho, sir. 

Q. Have you been in any way connected with any other insurance 
company, either life or fire ? A. Hot any, either directly or indi¬ 
rectly. 

Q. Your secretary received $5,000 ? A. Yes, sir. 

Q. He received no per centage ? A. Hothing whatever. 

Q. Has he received any money from any other insurance com¬ 
pany, in any way, to your knowledge? A. Hot a dollar; he left the 
office of secretary to our company this year to take the position of 
second vice-president in the Mutual Life Company. 

Q. The salary of the actuary, is it a per centage or a given sum ? ' 
A. It is a per centage, based upon the business he brings to the com¬ 
pany through his agents. 

Q. Does he bring business to the company ? A. Lie does, in this 
way : his functions being entirely different from those of the actua¬ 
ries in other companies ; in the first place, his preference is for field 
work, and nine-tenths of the time he is with the agents; the reason 
we took him, in the first place, was because he controlled eight or ten 
skillful agents, and he spent his time with them, and proposed to aid 
them ; lie has never taken one dollar, except his commission on the 
business he brought to us. 

Q. Does that amount stated here, $4,000, cover the amount he w^as 


76 


entitled to claim for services rendered during the year ? A. That is 

the amount paid him. # 

Q. Does that cover the amount he was entitled to claim for ser¬ 
vices? A. We cannot make up a statement of the years business 
until some time after December 5 the statement of 1875 paid him 
$ 4 , 200 , and his business for 1876 came to the same ratio ; we paid 
him $ 4 , 000 , agreeing to make up the balance, if any were due him, 
or take it off, as the case might be, when the business was made up. 

Q. How much has he taken since he has been with you A. He 
has never taken, to my knowledge, more than $4,500. 

Q. How take the medical examiners ; was that amount, $ 2 , 2 o 0 , all 
that he was entitled to receive from the company for his year’s ser¬ 
vices? A. Every dollar. 

Q. And the $il,493, stated here as paid to medical examiners all 
over the country, was that for medical examiners other than the 
chief medical examiner at home ? A. That is paid to sixty or sev¬ 
enty medical examiners, scattered all over the United States and 
Canada. 

Q. Is your company a capital or mutual company ? A. It is what 
is called a mixed company; it has capital. 

Q. How much is the capital of the company ? A. Two hundred 
thousand dollars. 

Q. When was it organized ? A. It began its business in 1867, in 
June. 

Q. And when did your connection with it commence ? A. In 
June, 1870. 

Q. Since you have been there, has the company paid dividends to 
its stockholders? A. Once. 

Q. When was that? A. In 1875. 

Q. And what dividend did it pay its stockholders then ? A. It 
paid in October, 1875, three and a half per cent., and in May, 1876, 
three and a half per cent., making, in all, seven per cent, for the 
year. 

Q. Is that the only dividend the company has paid since you have 
been with it, in 1870? A. Yes; in any way, shape or manner. 

Q. Do you take premium notes? A. Ho, sir; not in our business. 

Q. Independent of premium notes, how much are the assets of the 
company? A. About $ 2 , 000 , 000 . 

Q. And of what does that consist; perhaps you will state it more 
briefly in your own way than by any question I can put ? A. It 
consists of United States bonds, and bonds of the city and of the 
State of Hew York, both aggregating three hundred and fifty 7 five or 
sixty thousand dollars ; bonds and mortgages, $706,250 ; real estate, 
being its home building in Hew York, of $276,000, which brings us 
a rental of over $30,000; it also consists of $96,000 in call loans, 
all demand loans and bonds of the city ; $365,000 in premium loan 
on its own business, on policies in force; cash on hand, $ 20 , 000 ; 
accrued interest on the company’s investments, and accrued rents, 
thereof, $30,000; deferred premiums, $180,000 ; premiums in the 
hands of agents, in course of collection, $129,000; then there were 
other items which brought it up to $2,300,000. 


77 


Q. As to these mortgages and bonds, or take the bonds spoken of 
first, can yon separate them ? A. Well, the five-twenties have been 
called in; I think there is about $150,000 in United States govern¬ 
ments, and $200,000 in New York city, Peekskill and State bonds. 

Q. Peekskill bonds are village bonds, are they not ? A. If that is 
a village they are. 

Q. Have you any funds invested in corporate bonds? A. No, sir. 

Q. Don’t you consider them good security? A. No, sir, and never 
touch them. 

Q, As to the mortgages ? A. I was about to observe that these 
bonds are all government bonds, or of a class of bonds recognized by 
law* as valid securities, every one of them. 

Q. Are they quoted by you at their market value, say this fall ? 
A At their market value at the end of 1876. 

Q. As to the mortgages; how much was invested within, say the 
last year ? A. Say $ 100,000 ; about that. 

Q. Describe the method of investment pursued in your company 
in regard to mortgages ? A. The applicant comes to the company 
and says he wants money; he makes the usual written application to 
the company, setting forth all the facts of his property, and furnish¬ 
ing a diagram, and it is then turned over to three officers of the 
company, besides the official appraiser, and they make three or four 
different appraisements of the property, and get together and make 
the loan according to the combined wisdom, and then it is turned 
over to the attorney. 

Q. Suppose it is out of the city? A. We don’t entertain it; we 
have not a dollar outside the two cities. 

Q. Then your loans are very compact? A. Yes; we can stand 
on the roof and see most of them. 

Q. What per centage of the value of the property as estimated or 
appraised do you loan? A. Not to exceed fifty per cent; they 
usually run about forty or forty-five per cent. 

Q. Not to exceed fifty per cent ? A. Not to exceed fifty in any 
case. 

Q. Who pays the expense of the search ? A. To the best of my 
knowledge the applicant—the borrower. 

By Mr. W eiant : 

Q. Don’t you know ? A. I know we never paid a dollar on the 
mortgage. 

By Mr. Moak : 

Q. You loaned at seven per cent ? A. We have not a loan except 
at seven per cent; nothing lower or higher than that. 

Q. Are all your loans on real estate owned by individuals ? A. 
Except in one case, if a church can be called a corporation in the eye 
of the law. 

Q. Yes, it is ? A. Then we have a mortgage on a church; in 
every other case it is on individual property to the best of iny 
knowledge and belief. 


78 


Q. Iiow much is that loan ? A. Just $30,000. 

Q. How much is the largest loan you have on one piece of prop¬ 
erty? A. We never advanced over $40,000. 

Q. And what was the value of the property on which that amount 
was loaned, as estimated ? A. It was estimated as worth from 

$90,000 to $100,000. 

Q. Where is it ? A. In Brooklyn. 

Q. You have got a fire insurance policy as collateral, I suppose ? 
A. Full; ample. 

Q. All these mortgages are secured by collateral tire insurance ( 
A. In every instance, 

Q. You spoke of a class of loans called demand loans: those are 
loans to individuals, secured by public bonds, I suppose ? A. Yes, 
bv either governments, or by bonds of the city or the State of Yew 
York. 

Q. They are either governments or those bonds on which you are 
authorized to advance? A. Yes: such as we are authorized to put 
our money in. 

Q. On those bonds what do you advance? A. We generally 
reserve about thirty per cent. 


t 


By Mr. W eiant : 

Q. Are you authorized to loan money on that class of security ? 
A. I believe you. 


By Mr. Moak : 

Q. The home office you estimate as worth $276,000; what was the 
cost of it ? A. That was the cost of it; it is worth over $300,000. 

Q. Where is it ? A. On the corner of Park place and Church 
street; it is seven stories in height, fifty by 100 feet, containing 
seventy-one offices, and rents for $30,000 now; if the balance of the 
building was rented as well as that which is rented, it would bring 
over $40,000. 

Q. Is that all ? A. That is every dollar ; we never owned a dol¬ 
lar’s worth outside that since the company was started: we have 
nothing under foreclosure. 

Q. Have you foreclosed anything during the past year ? A. Yes, 
two pieces that are being foreclosed. 

Q. How much are they in amount ? A. It is about $14,000 ; up 
to last year we only foi eelosed two pieces of property since the com¬ 
pany started; we never lost a dollar on a mortgage. 

Q. Has your interest been promptly paid ? A. There is $13,000 
unpaid on mortgages. 

Q. You speak of premium loans, amounting to $365,000 ; describe 
them; I suppose they are notes taken as part of the premium, are 
they? A. They are not absolutely notes signed by the policy- 


79 


holders, but they are charged against the policies; if the gross pre¬ 
mium is $100 a year, and he takes a note policy, we agreed to take 
$66 in cash and let $33 stand against the policy, upon which he 
pays his interest; the company started on that plan, and went on 
with it until T was connected with it, and one of the first official 
acts I did was to stop it, and start it into the new business; as it 
had been going on, we had to respect that arrangement with those 
policies in force ; these notes are enforced on those policies which 
were issued prior to that time. 

Q. In case of a loss, that would be taken out of the policy? A. 
Yes ; and if a paid-up policy was granted the loans would stand 
against it, and bear interest to the company. 

Q. You would not issue a paid-up policy under those circum¬ 
stances. would you? A. Yes. 

Q. Then, how would those loans operate in that regard ? A. 
They would stand against it, just the same as a bond and mortgage; 
if it were not paid We should foreclose it. 

Q. If you issue a paid-up policy, does it state that it is subject to 
a certain amount for notes? A Oh, clearly. 

By the Chairman : 

Q. Do you have any thing in your policies providing for the 
issue of a paid up policy on forfeiture ? A. Some of our policies 
provide for that; some do not; it is according to the way they take 
it out; if a man is willing to pay for it we give it to him. 

Q. You leave it to the option, then, of the insured, whether he 
will take a non-forfeitable policy or not, and if so, you charge him 
something extra ' A. On premiums, yes, sir. 

Q. Then you leave it to his opion? A. We issue a life policy, 
upon which we give only dividends, and upon which, after three 
years, we give a paid-up policy, if desired; we issue endowments, 
for which, after three years, we give a paid-up policy; we issue 
reserved endowments, upon which there is no paid-up policy given 
until after ten years; in consideration that the dividends are fore¬ 
gone for that time we hold out a liberal degree of grace, providing 
that the man shall have a month for which the policy shall run, 
and up to six months on which the policy is in full force and 

effect. t 

Q. Suppose it runs a year, you give him a month? A. Yes, sir; 
and the next year two months, and the next year three, up to six 
months, during which time the policy is in full force and effect; if 
he dies in the mean time, we deduct it from the amount of the 
policy. 

Q. You spoke of the interest being $30,000; what is that inter¬ 
est ? A. That is the interest accrued upon government bonds be¬ 
longing to the company, of city bonds, bonds and mortgages and 
rents accrued. 

Q. You speak of the deferred premiums, what are they ? A. Well, 
deferred premiums are parts of an annual premium due the year 
after our report is made up; for instance, a man’s premium is $100, 
and he takes his policy up in December, the company receives $50 


80 


in December and $50 in the next June; the State department 
charges the company with the full liability, jlist as if we leceived 
the full $100, and then gives us the credit next year for the expense 
of getting it. 

By Mr. Moak : 

Q. By deferred premiums you mean premiums where the insured 
has six months 1 credit ? A. \ es; or three months. 

Q. By that you mean premiums for the current year which have 
not been paid ? A. Yes, on policies in force. 

Q. The $129,000 for agents is for premiums in course of collec¬ 
tion? A. Yes; and to" pay the expenses of transmitting them 
through. 

By the Chairman : 

Q. What do pay your agents ? A. We pay them a maximum of 
thirty per cent on the first premium, and seven and a half per 
cent, not to exceed ten years, on renewals; in some cases—extraor¬ 
dinary cases, we have paid thirty per cent and ten per cent on four 
renewals; but the usual practice is thirty per cent on the first, and 
nine renewals on seven and a half per cent; then the interest reverts 
to the company without any commission except what is paid for col¬ 
lection. 

Q. Where the commissions are high, don’t you think there is dan¬ 
ger of a company taking bad risks, and so increasing the liability of 
the company? A. Well, there is a strong temptation in that 
direction. 

Q. Don’t you know that fifteen years ago an established agency in 
a place had no charge and got no more than fifteen per cent ? A. 
Yes; and large fortunes have been made out of it at that. 

By Mr. Lang : 

Q. I wish to ask yon a general cpiestion, and I ask it as an insur¬ 
ance man: do not companies in the abstract of their books credit 
themselves with lapsed policies, and also with premiums unpaid on 
the same policies ? A. No decent company does that. 

Q. I understand from a question I asked another gentleman on 
the stand here that policies are lapsed in fact, and yet, for the pur¬ 
pose of doing the business of the company they are not treated as 
lapsed; does not that distinctive feature appear on the record made 
by the company to the Insurance Department? A. No; the fault, 
I take it has been the other way; but some of the scallawag com¬ 
panies have canceled policies in force, and thus relieved themselves 
of the debt on those policies, which should appear on the returns 
made 

By Mr. Weiant : 

Q. Are there any such companies now in force ? A. Not to my 
knowledge; if so, I hope you will root it out. 

By Mr. Moody : 

Q. When did you build ? A. It is a building we bought in 1865. 


81 


By Mr. Lang : 

Q. Do not those companies credit themselves with premiums on 
those policies which have lapsed ? A. I don’t know whether they 
do or not; but if you ask me whether we do, I would say never on 
one policy. 

Q. What do you understand by the principle of commutation of 
salary, or commutation of commissions ? A. That is a legitimate 
item ; it depends upon what the circumstances are; if I am hiring a 
house, and paying $5,000 a year for it, the landlord comes to me, 
and says I am very hard-up, and if you will give me $50,000, I will 
give you a ten year’s lease of it; that will be esteemed a good busi¬ 
ness transaction pthe practice will be not to charge it all up to that 
particular year, but over the years which it extends ; it depends upon 
the price paid, of course, and you may pay too dear for your 
whistle. 

By Mr. Wei ant: 

Q. Won’t you illustrate how that is done? A. If an agent 
has a contract with the company, by which he is to receive seven and 
a-lialf per cent on renewals, extending over a series of years ; he 
comes to us and says, I am tired of life insurance business, and 1 am 
going to get out of it; you will owe me for a certain time seven and 
a-lialf per cent on the policies I have given you, what will you give 
me and take it off my hands ; the company will give him three times 
the renewal; that is, three times seven and a-half, less three times 
two and a-half, or, in other words, that is three times what he is 
entitled to, less three times what we have to pay to get it in ; it is 
not fair to charge it all in any one year, but it ought to be spread 
over the years it comes in; it is a very good principle, and works 
well. 


By Mr. Moak : 

Q. For the past year how many litigated claims have you had ? 
A. I don’t know of but one. 

Q. And how much was that in amount ? A. I think it was 
$1,000 ; it was a small policy. 

Q. What was the entire amount of policies that fell due ? A. 
Two hundred and thirty-five thousand dollars during the year. 

Q. Was any portion of that unpaid after the time when it became 
due by the terms of the policy ? A. No. 

Q. Has your company ever paid any person anything for the pur¬ 
pose of securing or procuring the surrender of policies? A. Not a 
dollar. 

By Mr. Moody : 

Q. Do you keep an account of the policies that lapsed ? A. No ; 
not by themselves. 

Q. I see bv your report you give the number of policies that 
lapsed during 1875, by reason of non-payment, at 2,888; is this the 
number in 1875 ? A. I think it is, to the best of my knowledge. 

6 


82 


Q. That number of policies lapsed during the year ? A. During 
the year 1875, do you mean ? 

Q. Yes ? A. Yes. 

Q. How came they to lapse ? A. By reason of non-payment of 
premiums. 

By Mr. Weiant : 

Q. How many were there that lapsed this year ? A. I don’t know, 
sir. 

Q. Can’t you give us about some idea ? A. I suppose, on general 
principles, about the same ; I suppose on some of them the cash value 
was given, and some had paid-up policies, and some lapsed. 

Q. Can you give the amount of the policies? A. Perhaps two 
millions of insurance. 

Q. There was also a reserve on the policy, was there not? A. Yes; 
•certainly. 

Q. How much was that ? A. I don’t know. 

Q. Give a general estimate? A. Well, it might be a matter of— 
1 don’t know—it is too much of a guess. 

Q. Well, give us a guess? A. It might be from $75,000 to 

$ 100 , 000 . 

Q. Can you tell us how much you were paid on lapsed policies ? 
A. The report shows it. 

Q. This year, can you give us an idea? A. We have paid over 

$ 100 , 000 . 

Q. Do you think it will reach $150,000 ? A. I think, between 
the two sums; I could have brought the figures with me if I had 
known they were wanted. 

By Mr. Moak : 

Q. I think you stated you hold stock in the company ? A. Ho, 
■sir. 

Q. Will you state whether you door not? A. I said I did not. 

Q. There are other officers that do, I suppose ? A. The president 
is the only owner of stock to my knowledge. 

Q. What is his name ? A. Joseph F. Knapp. 

Q. Can you give the amount of stock he owns ? A. I don’t know, 
sir. 

Q. Can you, approximately ? A. Well, I think he owns some¬ 
where about $50,000 worth of it. 

Q. There are other officers that hold stock ? A. Hot any. 

Q Hone, with the exception of Mr. Knapp ? A. He is the only 
one. 

Q. The remainder is held by outside persons ? A. Between fifty 
and sixty persons. 

Q. Your capital is $ 200,000 ? A. Yes, sir. 

Q. Can you state who holds the next largest amount ? A. I do 
not know. 

Q. Can you state approximately the amount held by any other 
person ? A. I cannot; I think it is held in shares of twenty, thirty 
and fifty, and so forth. 


83 


Q. My idea is to get at who holds the majority? A. Well, the 
majority of the stock, I think, to the best of my knowledge and 
belief, is held by about twenty men. 

Q. Less than that, do you believe ? A. I don’t believe it. 

Q. Have you stated whether any of your directors were officers or 
directors or agents or in any way connected with any other company ? 
A. I stated none of them were. 

Q* \ ou stated you had made loans on government bonds and 
securities where they were pledged ? A. Yes. 

Q. Do you know whether those loans were to either the officers 
or stockholders ? A. It has been done in some cases with some of 
the directors temporarily . 

Q. To what amount? A. Well, to an amount of within twenty 
or thirty per cent of the face of the bond, or the market value of 
them. 


Q. Give the aggregate amount ? A. That I don’t know. 

Q. Can’t you give approximately the amount of loans that were 
made that way ? A. Perhaps $10,000 or $15,000 to one man ; they 
are quite smail loans. 

Q. And that has been done in more than one instance ? A. It 
has been done variously for the last five or six years to my knowl¬ 
edge, but not to any great extent. 

Q. Have loans been made to any of the officers of the company 
in any other way ? A. Not a dollar, to my knowledge. 

Q. Has your company borrowed money from other corporations 
or individuals? A. It has borrowed money very rarely from the 
bank, temporarily. 

Q. What bank, sir ? A. Generally from our most active bank, 
the National Shoe and Leather Bank; that is where we have a 
chance of putting money out on mortgage to a certain amount, and 
did not want to lose it, so we got the money and made the loans; it 
was purely a matter of convenience; and when the money came in 
we took it up again. 

Q. When was that done ? A. It was done last May, I think; it 
is very rarely done; it is our general rule to keep the amounts of 
our loans equal with our income ; but rather than lose a good mort¬ 
gage we go and borrow money. 

Q. Has your company borrowed money from individuals? A. 
No; never. 

Q. Has any of the officers of the company borrowed on behalf of 
the company ? A. Not to my knowledge. 

Q. Have you been in the habit of making up the reports for the 
insurance department ? A. I helped to do it. 

Q. Acting in connection with the other officers? A. Yes, sir; I 
am happy to say I have that pleasure. 

Q. Then you have personal knowledge of the facts contained in 
the reports ? A. Most of them; most of the facts are taken from 
the books. 


By Mr. Lang : 

Q. You say you have borrowed from the bank ? A Yes. 


84 


Q. What relation, with reference to the time of the examination 
made by the department or company, if any, was made, did the 
borrowing from the bank bear? A. We never had an examination 
but once, and that was in the year 1871, and up to that ime we 
never had borrowed a dollar that I know of. 

Q. And no examination of the company has been made by the 
superintendent of the insurance since ? A. No, sir; we have been 
anxiously waiting for the past six months for him to come and visit 
us, but they seem to think there that we are pure, and that there is- 
no need of their coming. 

Q. In your report of cash on hand—I mean to ask you with 
reference to your company, and also if you have knowledge of its- 
existence in any other company—is there included tickets or memo¬ 
randa of money taken by the officers and represented as cash on 
hand ; I mean slips thrown into the drawer ? A. I will answer 
with reference to ourselves, no ; I will answer with reference to 
others that I have heard so ; that I have no knowledge. 

Q. I want to ask you squarely what you know about it, either as 
to your own company or to others ; it is claimed that parties, foi the 
purpose of making a show when the officers go down there, get 
money from the bank and report so much on hand, and as soon as 
he has gone out they send it out of the back door to the company 
which is to be examined next; do you know anything about it, or 
have you any information of any such trrnsactions by any company?. 
A. I do not know of my own knowledge. 

Q. Have you any information ? A. I have heard that the Conti¬ 
nental and New Jersey played that game, but when the company 
borrows anything from the bank they have to put up something for 
it, and it is very easy for the commissioner to go to the tin box and 
say, where are your bonds. 

By Mr. Weiant : 

Q. Could an individual stockholder or officer borrow on his own 
account ? A. I presume he could. 

Q. And put it back in a day or two ? A. Yes, sir. 

Q. Have you any knowledge of that being done? A. I have not r 
but when men undertake to beat the devil around the stump, there 
is no legislation that can stop them; that thing can be done. 

Q. Then the fault is in the want of thoroughness in the depart¬ 
ment ? A. I would not like to be known in Albany as saying 
there is a want of thoroughness in the Insurance Department. 

Q. Do you do business, at all, on what is called the loan plan ; 
you understand what I mean by that plan ? A. I understand that 
perfectly ; when the company commenced its business in 1867, it did 
what most of the companies doing business did ; it took part of its 
premium either by note of the insured, which operated as a debt to 
the policy, and so reserved a part of the premium, that is to say, that 
where a man’s premium is $100, the company agreed to take sixty- 
six dollars and give him credit for thirty-three dollars; if there is any 
dividend it is charged to that first. 


85 


Q. That is to say the charges upon the policies have been reduced 
by dividends and the earnings of the company? A. Yes. 

Q. To what extent in your company? A. Well, whenever any 
dividends have applied to the reduction of the debt they virtually 
wiped out those notes ; I cannot tell you to what extent, but it has 
been done; you understand me to say that it is some years since 
that has stopped; that was one of my first official acts to stop the 
note system. 

Q. When you stopped the loan system those that have been con¬ 
tinued under the loan system, they were continued in force? A. 
Yes. 

Q. Now, take a policy of $3,000, which has been in force say 
three years, was it not true that the thirty three and a half per cent 
that remained as a charge to the policy, had been materially reduced 
by the application of the dividend to the reduction of the loan ? A. 
Well, if the dividend did not exceed more than enough to pay the 
interest on the loan, the principal would not be reduced; if the divi¬ 
dend would take care of the interest and leave a balance, it would 
then apply to the reduction of the loan. 

Q. Has the dividend taken care of the interest all that time? A. 
Yes. 

Q. Are you aware that your actuary, at that time, so stated to 
policyholders, that it did not reduce or had not reduced their prin¬ 
ciple interest ? A. I am not. 

Q. And that large numbers of those policies were lapsed at that 
time in consequence of that information ? A. I am not aware of it. 

Q. I refer to the time you discontinued doing business on the loan 
plan ? A. If you have a particular policy in your mind I will hunt 
all about it up and give it to you; the representation of most com¬ 
panies have been the other way, the agent generally says if you take 
a loan policy, we will see the interest will wipe out. 

Q. Do you think it safe and prudent, taking men as they are, and 
insurance men as they are, that the vice-president, president or other 
officers of the company should be officers of any other company or 
have any thing to do with them? A. As a general thing, I should 
say * no ; there may be exceptional cases, but 1 don’t think they 
should. 

Q. Now, with reference to your loans on property in the city of 
New York, some abuses are claimed to have grown out of this state 
of things by reason of officers of life insurance companies being also 
officers of lire insurance companies, and they play naturally into each 
-other’s hands that way; that life insurance companies in making a 
loan on a piece of property say, you must get it insured, and we have 
great confidence in this company next door, and insist that you must 
insure in that company; do you know how that thing works; have 
you any knowledge of the abuse growing out of that state of things; 
jyou do make that kind of loans? A. Yes. 

Q. Have you any knowledge that will enable you to speak as to 
the propriety of men being connected with fire insurance and life 
insurance making loans, and insisting on the policy being taken out 
in certain fire insurance companies, and so playing into each other’s 


86 


hands? A. You ask me if it is possible that abuses may get in ; I 
say yes, but I never heard of such a case as that. 

Q. The complaint has been made ? A. 1 es, it has been made. 

Q. Do you think, in your experience as an insurance man, does 
that experience lead you to believe that assuming the companies 
would not lose, that safe legislation could be had to the effect that 
policies should not lapse in the sense that the amount of interest the 
insured has in it is n’ot realized by him in some form ? A. There is 
something in that direction which it is in the province of legislation 
to do, and could be done with good grace to the policyholder and 
without prejudicing the interests of the company. 

Q. Do you favor the Massachusetts plan, or would you favor the 
paid-up policy system ? A. I should favor the paid-up policy, as- 
being more convenient for the business; the other is a ragged thing, 
extending over months ; they don’t give him the policy at all, but 
provide that if he dies within a number of days agreed upon, they 
will pay his wife or widow the face of the policy less the amount of 
premium he should have paid up; as a general thing I don’t believe 
in opening doors for men to get out of companies whenever they 
please. 

Q. Who was the actuary of the company at the time you used to 
do business on the loan plan? A. We had none. 


By the Chairman : 

Q. Did’t you always have one? A. No, some companies don’t; 
generally at the end of the year if any thing turns up we call in a 
consulting actuary. 

Q. Who performed the duties of actuary ? A. I think Mr. D. P. 
Fackler of New York. 

By Mr. Moody: 

Q. You have a capital stock of $200,000? A. We have. 

Q. You have a large surplus; will you please state what the com¬ 
pany pays State taxes upon? A. We pay upon the premium in 
States in which such tax is paid, from a-quarter to three per cent. 

By Mr. Lang : 

Q, Do you think it will be better to have the time fixed in which 
the companies can plead fraud in the execution of a policy; a great 
many insurance companies take men’s money and put a very great 
many things in the questions, and then put a clause in the policy 
that if any thing is wrong in the answer, a policy shall be void ; for 
example, if any of his ancestors died of cancer, and he died of a rail¬ 
road accident, and he didn’t happen to know that his ancestor died 
of a cancer, they would claim that his policy was void; do you think 
it would be better to fix a time in which that company would be 
prohibited setting up that defense? A. No ; I would leave it as it 
is now; if a lie is told to-day, it isn’t any less a lie two years lienee, 
mid the fact that the lie has existed two years, makes it no better. 


i 


87 


Q. On what amount did your company pay taxes ? A. I cannot 
answer that; we pay in various states a tax upon our income 

Q. In this state ? A. I cannot tell; it is in the official records of 
the Insurance Department. 

By Mr. Moody : 

Q. In the city of New York what are you assessed upon ? A. 
That portion of our capital which is not in government bonds or real 
estate, and it is all in that; we pay no tax in this State except the 
fees of the department. 

Q. If your surplus is in bonds and mortgages, are thej' not assessed? 
A. Yes, it would be if it w r ere. 

Q. Your surplus is invested in bonds and mortgages, is it not? A. 
No: in governments. 

Q. You have no investments in bonds and mortgages ? A. Yes; 
but we set them off against our debts. 

By Mr. L ang : 

Q. Why should you not pay taxes upon your two millions surplus'* 
A. I will refer you to the counsel of the company for an answer to 
that; the gross accumulations must not be confounded with the 
surplus. 

Q. On gross accumulations you pay no taxes? A. No, sir; real 
estate is assessed as real estate, and we pay upon real estate the 
same as upon anything else. 

Q. You treat the reserve the same as what you do the policy¬ 
holder ? A. It is treated as an amount due; it is liabilities. 

Q. And your liabilities you have to take in consideration as rein¬ 
surance, 1 suppose? A. Yes, sir. 

By Mr. Moak : 

Q. Has your company, during the last five years, made any rein¬ 
surance upon the risks of other companies? A. Never. 

Q. Or lias it reinsured any of its own risks with any other com¬ 
pany ? A. No, sir ; strictly minds its own business. 

James M. Freeman, sworn : 

Examined by Mr. Moak : 

Q. Your president is not here, is he? A. No, sir; he is sick, and 
in Florida. 

Q. How long has he been there? A. About a month or two; he 
went in January. 

Q. Have you a statement with you of the salary paid to the offi¬ 
cers ? A. Yes, sir ; the apology I want to make to the committee is 
this : after I got a copy of the resolution, this statement was made 
out by the book-keeper and handed to me, and I laid it in my 
drawer, awaiting the return ef the president, who, I understood, was 
required to sign it with the secretary; the president not being in the 
city, I held it back, and would have held it back three weeks more, 
when he will return, had not the second resolution arrived ; when 


88 


the second resolution came, I signed it myself and brought it along; 
the statement is as follows : 


Detailed Statement of Salaries and all other Fees, Compensation, 
or Donation paid to Officers, Medical Examiners, Attorneys, 
Counselors and all other Employes of the Globe Mutual Life 
Insurance Company, during the year 1876. 

Amount of salary paid to president during the year - $2,500 00 

Amount of all other fees, compensation or donation, if 

any paid to the president during the year - 10,000 00 

Total $12,500 00 


Amount of salary paid to managing director of agencies 

during the year ------- $6,333 33 

Amount of all other fees, compensation or donation, if 
any, paid vice-president or vice-presidents during the 
year, nothing 

Total - - - .... $6,333 33 


Amount of salary paid to each secretary during the year, 

being one in number ------ $2,500 00 

Amount of all other fees, compensation or donation, if 

any, paid secretary or secretaries during the year - 5,000 00 

Total.. $7,500 00 


Amount of salary paid each actuary during the year, 

being one in number- -.---- $3,918 66 

Amount of all other fees, compensation or donation, if 
any, paid actuary or actuaries during the year, 
nothing 

Total.$3,918 66 


Amount of salary paid to medical examiners during the 

year, being two in number ..... $5,500 00 

Amount of all other fees, compensation or donation, if 
any, paid medical examiners during the year nothing. 


- $5,500 00 


Total 

















89 


Amount of salary paid to attorneys and counselors during 

the year, being two in number ; $0,520 02 

Amount of all other fees, compensation or donation, if 
any, paid attorneys and counselors during the year, 
nothing 

Total.. $6,520 02 


Average amount of salary paid to all other clerks and 
employes of the company during the year, $1,825, 

being fourteen in number.$25,550 20 

Amount of all other fees, compensation or donation, if 
any, paid to all other clerks and employes of the com¬ 
pany during the year, nothing 


Total 


- $25,550 20 


Aggregate 


- $67,822 21 


STATE OF NEW YORK, ) 
County of New York, j ' s * 


, president, and James M. Freeman, secretary of the 
Globe Mutual Life Insurance Company, being duly sworn, depose 
and say, and each for himself says, that they are the above described 
officers of said company, and that the foregoing detailed statement 
is a full and correct exhibit of the amount paid in salaries, fees or 
compensation, or donation, to the president and vice-presidents, sec¬ 
retaries, actuaries, medical examiners, attorneys, counselors, clerks 
and other employes of this company during the year ending on the 
31st day of December, 1876. 

< JAMES M. FREEMAN, 

Secretary. 


Subscribed and sworn before me, ) 
this 14th day of March, 1877. j 


James Taylor, 

Notary Public , New Pork, No. 345 Broadway . 


Q. This statement is correct ? A. Yes, sir. 

Q. It is sworn to by you? A. Yes, sir; by me. 

Q. The amount of salary paid to the president during the year was 
$2,500? A. Yes, sir. 

Q. That was the regular salary of the president, was it? A. Yes, 
sir. 

Q. In addition to that you state the amount of all other fees and 
•compensations and additions to be $10,000 ? A. Yes, sir. 

Q. That is $12,500 ? A. Yes, sir. 










90 


Q. How was the $10,000 arrived at ; in what way ? A. That is 
two per cent on the net premium, net income. 

Q. During the year ? A. During the year 1876. 

Q. How long has that been the arrangement between the presi¬ 
dent and the company ? A. For a number of years. 

Q. How long to your knowledge 2 A. Seven years to my 
knowledge. 

Q. And has that been changed? A No, sir. 

Q, What has been the average salary of the president for the last 
five years, including the extra compensation he has received ? A- 
I should say it was about $1,000 more than that. 

Q. Why was it less last year than the previous year ? A. Because 
the income has fallen off. 

Q. The income is less? A. Yes, sir. 

Q. In consequence of a falling off in the insurance ? A. 1 es, and 
m consequence of an increase in the death rate; as the company 
gets older the death rate increases. 

Q. When was it organized ? A. In 1861. 

Q. How long have you been with it? A. Since 1871, I think. 

Q. All the while in the capacity of secretary ? A. Yes, sir. 

Q. Do you have a vice-president? A. We had a vice-president., 
but lie is dead. 

Q. When did he die ? A. The year before last. 

• Q. You have none since then ? A. No, sir. 

Q. Up to the time of his death " hat was his salary per annum ? 
A. Nothing. 

Q. Did he receive nothing from the company, either directly or 
indirectly? A. No, sir; let me make an addition ; I am not very 
pat with my answers because I brought that statement up with me 
and thought that would be sufficient; we had another vice-president 
called the second vice-president, who joined us in 1869; he received 
a salary, or rather a commission. 

Q. Of how much ? A. I can tell you the amount, but I don-1 
know how it was fixed ; it was about $12,000. 

Q. Per annum ? A. Yes, sir. 

Q. That ceased in 1869 ? A. That ceased when he resigned; 
since that there has been no second vice-president. 

Q. Has the president, within the last five years, received anything 
except the salary of which you have spoken ? A. No, sir. 

Q. Directly or indirectly, from the company or any of its assets ? 
A. Not a penny. 

Q. Has the president or any other officer in your company had 
any connection with any other company, either life or fire ? A. No, 
sir. 

Q. Either directly or indirectly ? A. No, sir. 

Q. Has he received any money from your company, either direct¬ 
ly or indirectly ? A. No, sir ; not in addition to his salary that I 
have spoken of. 

Q. Has any officer had loans from the company ? A. Yes, sir. 

Q. State whom? A. I have a loan now of $6,000 upon a piece 
of property on bond and mortgage. 


91 


Q. You have that? A. I have that. 

Q. He has none ? A. Ho; there are only two officers. 

By Mr. Wei ant: 

Q. Will you describe how it was made to you ? A. The same as 
any other loan; we have a blank application. 

Q. Did you sign one ? A. Yes, sir ? and submitted it to the pres¬ 
ident, and asked him if he would allow it. 

Q. Is that the manner of doing business? A. Ho, sir; I asked 
him whether it would be proper to make me the loan, and he said 
yes, if the property was right; he took the application and passed it 
over to the examiner (all our examiners have to be directors of the 
company); he reported on it to the finance committee; the finance 
committee approved it, and the loan was regularly made. 

Q. Secured by bond and mortgage? A. Y r es, sir. 

Q. Who was the examiner in this instance; can you give his name ? 
A. JNo, sir; the member of the finance committee that approved it 
was Mr. Smith, of Brooklyn. 

Q. 1 ou don’t know the man that examined your property when 
the loan was made? A. I was trying to think; it was either John 
Van Hest, Cyrus P. Smith or John Gf. Freeman ; it was one of the 
three, but I don’t remember which. 

Q. Who constitute the finance committee ? A. Dr. George Lor- 
rillard, John Yan Hest, Cyrus P. Smith, and the president ex officio . 

Q. The loan was made after an action on it by the board of direct¬ 
ors ? A. It was made like all other loans. 

Q. You mean like all your loans, that was, after an action on it by 
the board of directors ? A. Yes, sir. 

By Mr. Moak : 

Q. When did you purchase this property upon which the security 
was given ? A. About three years ago. 

Q. How much did you pay for it ? A. Eleven thousand five hun¬ 
dred dollars. 

Q. Had you made any improvement on it after purchasing, and 
before the mortgage was put on it? A. Yes, sir. 

Q. How much did they cost ? A. I suppose I laid out seven or 
eight hundred dollars on it. 

Q. At the time you gave the mortgage was there any incumbrance 
on it? A. Hone, sir. 

Q. They loaned you on that property $6,000 ? A. Yes, sir. 

Q. Was there a house on it? A. Yes, sir; there are two houses; 
two large houses. 

Q. Were these houses insured ? A. Yes, sir. 

Q. For how much ? A. For $6,500. 

Q. And these policies were assigned to the company as collateral 
for the bond and mortgage? A. Yes, sir. 

Q. What was a fair cash value of the entire property, at the time 
you got the mortgage upon it, in your judgment? A. Well, if you 
would offer me $13,000 I should decline it. 


92 


Q f What was its fair cash value, according to jour opinion ? A. 
I would sell it for $14,000. 

Q. That does not answer my question? A. Well, $14,000. 

By Mr. Moody : 

Q. You say that was its fair marketable value? A. i r es, sir. 

Q. Suppose it was put into market, what would it sell for; not 
what you would take for it ? A. I should say $10,500 or $11,000. 

By Mr. Weiant : 

Q. Was the loan given at the time you purchased the property ? 
A. $o, sir. 

Q. It was since? A. Yes, sir. 

By Mr. Moak : 

Q. Has your company made any other loans to any of its officers, 
other than yourself ? A. Ho, sir. 

Q. Any loans to any of its directors ? A. Yes : I will answer that 
question, yes; there was a loan to Mr. Cyrus P. Smith, otBrooklyn, 
for $19,000, on his house. 

Q. On a single house ? A. Yes. 

Q When was that loan made, or about when? A. That loan, I 
think, was made in 1873; in the year of the panic. 

Q. How was that loan made; describe that; made the same as the 
other ? A. Substantially so; he came in and made an application 
for the loan; it went before the finance committee, and they ordered 
it to be examined; he was our examiner in Brooklyn, and could not 
examine his own property, and Mr. John Yan Nest, also on the 
finance committee, went and examined it. 

Q. Where is the house situated? A. It is on the Brooklyn 
Heights. 

Q. How much land is there connected with it ? A. I think it is 
four lots; we had a policy on Mr. Smith’s life, and all I know is, his 
son wanted to know whether we would allow him to set off the 
loss, that is, to allow the loss on the mortgage, $10,000, on it; I said 
yes ; I asked him what he would value the property at, and he said he 
would give $40,000 cash for it. 

Q. Have you, yourself, any knowledge of the value of this prop¬ 
erty? A. No, sir. 

By Mr. Moody : 

Q. There is a house on one of the lots, and three of the lots are 
vacant, I understand you to say ? A. I have not seen the property; 
I have very little to do with the real estate; if I had not seen his son 
could not tell you what I do now; he said there was one house and 
three lots. 

Q. You have no knowledge, yourself, of the value of the property ? 
A. No, sir; it might be worth $1,000 and it might be worth 
$100,000 for all I know. 


93 


Q. This Van Nest, who is he? A. He is one of the finance com¬ 
mittee, and a director. 

By Mr. Moak : 

Q. Has your company made any other loan to any other of the 
directors ? A. Not to my knowledge. 

Q. Have you heard of any? A. No, sir. 

Q. Y on spoke of a $10,000 policy on Mr. Smith’s life; has he 
recently died ? A. About three weeks a^o. 

Q. When was that insurance made? A. About eight or nine 
years ago. 

Q. \ on were not connected with the company at that time ? A, 
No, sir. 

Q. Has your company any other insurance on the lives of its- 
officers or directors ? A. It has an insurance on my life as secre¬ 
tary. 

Q. How much ? A. Ten thousand dollars. 

Q. AYhen was that made ? A. When I went in ; in 1870 or 1871, 
I think. 

Q. They have an insurance on your life of $10,000? A. l"es, sir, 

Q. At what premium ? A. I don’t remember the premium. 

Q. Don’t you know how much you pay per annum on your own 
premium ? A. No, sir. 

Q. Have you not some idea? A. Yes; if I was twenty-five years 
old the premium w r ould be twenty dollars a thousand ; I think it is 
about $250 premium; I could tell by referring to my check book. 

Q. Can’t you tell within twenty-five dollars ? A. I will tell you 
that $250 is within twenty-five dollars. 

Q. What was the usual rate at the time you took the policy ? A, 
That was the usual rate ; twenty-five dollars a thousand. 

Q. Were you examined by a physician in the usual way ? A. 
Yes, sir. 

Q. By whom ? A. By Dr. Parker, our medical examiner, 

Q. What is his first name? A. Theodore. 

Q. Did you sign an application in the usual manner ? A Yes, 
sir. 

Q. Did your company take all money or a note for a part ? A. It 
was all cash. 

Q. Have you paid your premium regularly ? A. Y r es, sir ; I did 
as I recommended every once else to do ; make it annual instead of 
quarterly. 

Q. Pay it once a year ? A. YYs, sir, in advance, 

Q. Has there been a time when the premium was not paid 
promptly ? A. No, sir; I am very careful; I will tell you, mjr 
premium falls due the fifteenth of July, and I always make it a rule 
to pay before the fourth of July. 

By Mr. Weiant : 

Q. How was it paid, and to whom ? A. It was paid iiYmoney'to* 
the cashier. 


94 


Q. Who is the cashier you paid it to ? A. Henry J. Stull. 

Q. That is the cashier of the insurance company ? A. That was 
the cashier then. 

Q. Who have you paid it to since ? A. To Mr. E. L. Thompson ; 
and I paid it to j. H. Hopkins, the present cashier. 

Q. You say you have paid it in cash; I understand you paid money 
right to him ? A. Yes, sir. 


By Mr. Moak : 

Q. In each instance? A. Yes, sir; I paid it the same as you 
would come in and hand it to the cashier, and he gave me a receipt. 

Q. Has your company other insurance on the life of its officers or 
directors? A. Yes, sir. 

Q. Whom ? A. John Van Nest has $10,000 on his life. 

Q. When was that obtained ? A. Before I came into the com¬ 
pany. 

Q. Is he still alive? A. Yes, sir. 

Q. Do you know anything about the manner in which it was 
obtained ? A. I know he pays it. 

Q. The manner in which it was obtained, I asked you ? A. No, 
sir. 

Q. As to the premium being paid promptly, how is that ? A. I 
know that it is paid, and has been in the past. 

Q. Every year? A. Yes, sir. 

Q. As soon as it became due ? A. Before. 

Q. About what is his age ? A. I could not tell; I should say he 
was sixty-five. 

Q. And what is the premium he pays every year? A. Well it is 
2 i large amount; I think it is $700 a year. 

Q. Is it an ordinary life policy? A. Yes; he is quite an old 
man. 

Q. Has he paid that sum ever since you were connected with it ? 
A. Yes, sir. 

Q. It is the same every year? A. Yes, sir. 

Q. Has your company any insurance on the life of any other of 
its members? A Yes, sir; we had an insurance on the life of Mr. 
Boring Andrews; we had about $10,000 on his life. 

Q. When was that obtained ? A. I guess in the year 1864. 

Q. When did he die ? A. I should say he died about three years 
ago. 

Q. How old a man was he when he died ? A. About seventy- 
seven or seventy-eight; he is said to have died worth about six or 
seven million dollars. 

Q. Do you know when his insurance was obtained ? A. Yes, sir; 
the first year the company was organized. 

Q. That was in 1864 ? A. Yes, sir. 

Q. He was one of the directors of the company ? A. He was the 
vice-president. 

Q. Do you know what premium he paid up to the time of his 
death ? A. I think he paid about $1,200 a year. 


95 


By Mr Moody : 

Q. How much was his insurance ? A. Ten thousand dollars. 

Q. At what age did lie die ? A. He died very near eighty ; he 
was a very old man. 

By Mr. Moak : 

Q. Has your company any insurance on the life of any other di¬ 
rector or officer ? A. I don’t remember. 

Q. Don’t you know whether it has or not? A. I do not. 

Q. As s:cretary of the company, don’t you know each person’s 
insurance; don’t that come within your knowledge? A. There was 
one that had about $11,000, but 1 don’t know who. 

Q. Do you know who the directors are ? A. Yes, sir. 

Q. You know their names? A. Yes, sir. 

Q. Don’t you know whether any other directors are insured be¬ 
sides those you have named ? A. Yes, there is another one insured. 

Q. Who is that? A. Union Adams; I remember him. 

Q. When was he insured ? A. He was insured before he became 
a director of the company, a great many years ago before I be¬ 
came attached to the company; before 1870. 

Q. When did he become a director of the company ? A. About 
four years ago. 

Q. How much is he insured for ? A. For $10,000. 

Q. What is his age ? A. I should say fifty-live. 

Q. What premium does he pay ? A. I think his premium is $500 
or $600. 

Q. How long ago was his policy obtained ? A. I should say it 
was obtained before I went into the company. 

Q. Have you any idea when it was obtained? A. Ho, sir. 

Q. Has your company any policy on the life of any other director 
or officer ? A. It has one on the president’s life. 

Q. What is his name ? A. Pliny Freeman. 

Q. How much is it ? A. Ten thousand dollars. 

Q. When was he insured? A. His policy is No. 1. 

Q. It was issued at the early formation of the company ? A. Yes, 
sir. 

Q. When was that ? A. In about 1864. 

Q. What office was he then holding? A. That of president. 

Q. What premium does he pay ? A. About $1,000 a year; he is 
quite an old man now; about eighty years old. 

Q. Has his premium been promptly paid? A. Yes, sir; he was 
sixty-six years old when the policy was taken. 

Q. Has your company any insurance upon any other of its officers 
or directors ? A. I think not, sir. 

Q. How many directors have you in all ? A. We have thirteen. 

Q. Name them, if you please, and we may then be able to get at 
it ? A. I will answer that question; I am pretty sure not, sir; I 
am endeavoring to be as exact as I can, and, as I say, I did not ex¬ 
pect to be catechised at all. 

Q. Is your company a stock company? A. Yes, sir. 


96 


Q. How much is the capital stock ? A. One hundred thousand! 
dollars. 

Q. Have there been any dividends paid on the capital ? A. Yes, 
sir. 

Q. How much has there been paid since you were connected with 
it ? A- It now amounts to about fourteen per cent on the 
$100,000. 

Q. There has been paid to the stockholders about fourteen per 
cent on the capital you say ? A. Yes, sir ; I will give you the pro¬ 
visions of the charter ; there are $100,000 of capital, and it is a 
mixed company ; the company declares a dividend, and twenty per 
cent is set aside, not paid to the policyholders, that is called the 
guarantee capital, until it should come up to the sum of $500,000 
the interest on that at seven per cent was paid to the stockholders ; 
at the present time that guarantee capital amounts to $100,000. 

Q. Making a total of $200,000? A. Yes, sir. 

Q. For how long has the stockholders received fourteen per cent? 
A. For two years. 

Q. How much was it before that? A. About twelve. 

Q. How long have they received that ? A. For about a year or 
two. 

Q. How much did they receive before that ? A. About eleven. 

Q. Your capital is $100,000 ; how much are the assets of the 
company ? A. About four millions and a half. 

Q. Of what do the assets consist ? A. There is about $2,000,000 
in bonds and mortgages. 

By the Chairman : 

Q. Located where? A. Almost entirely in New York city; then 
we have $600,000 in real estate, $700,000 worth of government 
securities, $850,000 in Brooklyn and New York city and New Y ork 
State bonds, $70,000 or $80,000 of temporary or demand loans. 

By Mr. Moak : 

Q. What are those ? A- Loans on government bonds, or Brook¬ 
lyn city bonds, or any security that we would buy if we wanted to 
buy. 

Q. Well ? A. Then there are deferred premiums, $125,000; pre¬ 
miums in course of transmission, $70,000 ; accrued interest, $20,000 ; 
I shall have to include cash, about $30,000; and that is all. 

Q. Now, the 2,000,000 in bond and mortgage, where is that real 
estate located ? A. About nineteen-twentieths in the cities of -New 
York and Brooklyn. 

Adjourned until 9 o’clock Wednesday morning. 


97 


Wednesday, March 21. 

The examination was resumed on Wednesday morning, March 21, 
at nine o’clock. 

Present, Mr. Cowdin in the chair. 

Examination of James M. Freeman resumed. 

By Mr. Moak : 

Q. Now, Mr. Freeman, you were speaking at the time of the 
adjournment, of the $2,000,000 in bonds and mortgages ; I under¬ 
stood you to say that nineteen-twentieths was either in New York or 
Brooklyn ; am I right? A. Yes, sir. 

Q. Will you state to the committee the method of loaning money 
on bond and mortgage by your company ? A. Yes, sir ; we have a 
form called the blank form of application for loans on bond and 
mortgage; a party comes in and desires a loan, and we give him this 
form; he tills it up, and sends it in to the company, and I examine 
it to see if it is in the district we can loan in; say in the State of 
New York or in New Jersey, in a radius of fifty miles ; that being 
the case, it is referred to the finance committee of the company. 

Q. Of whom does that consist ? A. The finance commi tee did 
consist of a chairman, Cyrus P. Smith, who died about three weeks 
ago; John Yan Nest, George Lorrillard, Union Adams, and the 
president, ex officio. 

Q. Well, go on? A. Those are the five members- 

By Mr. Wei ant : 

Q. Do not these same gentlemen act as appraisers in making 
loans? A. Yes, sir: Mr. Smith used to examine in Brooklyn. 

By Mr. Moak : 

Q. As appraiser? A. Yes, sir. 

Q. And who else ? A. Mr. John Yan Nest. 

Q. They examined and determined whether ii was a proper loan ? 
A. Yes, sir. 

Q. And the loan was made? A. Yes, sir. 

Q. As to the method of loaning, who pays the expense of the 
search and drawing the papers for making the loan? A. The applicant. 

Q. The company pays nothing? A. No. 

Q. Now, by whom are the papers drawn ? A. They are drawn by 
the lawyers of the company. 

Q. Well, who pays them? A. The applicant pays them if they 
get paid at all. 

Q. The company pays nothing? A. No, sir. 

By Mr. W eiant : 

Q Who are the attorneys of the company ? A. We have two 
sets; Taylor & Andrews, in Brooklyn, and Lowry & Marcel!ns, in 
Brooklyn. 

7 ' 


98 


Q. Have you any agencies in New Y^rk? A. Yes ; one attends 
exclusively to the New York business, the other exclusively to the 
Brooklyn business; Mr. Lowry died the day after Mr. Smith; and 
what made me feel very bad, was he had a policy with us for 
$ 10 , 000 . 

Q. Do those attorneys have the power , and are they allowed to 
appoint under attorneys ? A. No, sir. 

Q. None whatever? A. No, sir. 


By Mr. Moak. 

Q. Do you know what charges are paid by persons seeking loans, 
either for searches or drawing papers? A. No, sir; I think it is 
the regular rates; on small loans it is one per cent; on larger 
amounts they get three-quarters per cent. 

Q. Can you give me the maximum ? A. One per cent is the 
maximum, then it runs down as the loans increase in amount: I 
never knew this only upon general information ; we adopt the plan 
instituted by the Mutual Life Company a good many years ago, or 
rather the lawyers did. 

Q. What per cent of the value of the real estate as appraised is 
loaned upon ? A. Fifty per cent. 

Q. Not to exceed that? A. No, sir. 

Q Have you foreclosed any mortgages during the past year ? A. 
Yes, sir. 

Q. How have they run, so far as collecting the amount of the 
mortgages upon them; has the company bought in the titles to real 
estate sold under foreclosure of mortgage ? A. Yes, sir; about two 
or three pieces. 

Q. How much in value? A. They were small loans ; we bought 
in the year before a good many pieces, but last year it fell otf, and 
we only bought those we have named. 

Q. Take the year before, how many pieces did you buy in ? A. 
I guess about $70,000 or $80,000. 

Q. Have you sold any of that since ? A. No, sir. 

Q. Not any of it? A. No, sir. 

Q. So you are carrying all the real estate now ? A. Yes, sir. 

Q. At what price did you buy it? A. The amount the company 
loaned on it, about that. 

Q. About the amount of the loan ? A. Yes, sir. 

Q. In each case ? A. That was the instruction to the lawyers. 

Q. Did they buy in at the amount of the mortgage? A. I pre¬ 
sume so; that is what we instructed Taylor & Andrews and others 
to do. 

Q. Don’t you know ? A. I do not; in Brooklyn, I remember one 
case, because it was a remarkable one. 

Q Did you buy in at less than the face of the mortgage and the 
cost? A. Yes, sir; the loan in Brooklyn was $6,000 on the house, 
and Mr. Loring told me he paid $4,500 and got the property. 


99 


By Mr. Moody : 

Q. Where the property will not bring the face of the mortgage 
existing on it, is judgment obtained on the bond? A. Yes, sir. 

Q. And is that collected? A. No, sir; I beg pardon, I should 
say a suit was brought to recover the balance, and it is so in this 
case I have mentioned. 

Q. It was not foreclosed by action then ? A. Yes, sir. 

Q. Then judgment was for the amount of the mortgage and 
costs ? A. I am not enough of a lawyer to understand you; the 
lawyers go to work and foreclose, the property is sold, and they have 
instructions to buy in to the amount of the loan and costs; they do 
so; if it comes to less, they have instructions to go on and sue for 
the deficiency. 


By Mr. Moak : 

Q. Is that the only case that you know of where property was 
bought in for less than the incumbrance ? A. I don’t think of any 
other case of property bought in by our lawyers. 

Q. Where it was sold for less than the amount — if somebody 
else bought it in for less than the amount—it would be immaterial, 
for you get the money ? A. I don’t think they did. 

Q. You don’t think they did what? A. I think our lawyers 
bought it in on behalf of the company. 

Q. In all cases for the amount of the mortgage ? A. Yes, sir. 

Q. Except this one that you know of? A. Yes, sir. 

By Mr. Wei ant: 

Q. Are you confident that you are correct about this being the 
only case ? A. No, sir; I think we bought in another piece of prop¬ 
erty that day, too. 

Q. But this is the only case where it was bought in for less than 
the mortgage ? A. No, sir ; I don't think we have bought in a piece 
during the last three years where it has not been for less than the 
mortgage. 

By Mr. Moak : 

Q. Then you have, in all cases where you have foreclosed, bought 
in for less than the face of the mortgage and expenses? A. Yes, sir. 

Q* Take the case of the six thousand ; how long had it been 
standing ? A. Six years. 

Q. How many thousand dollars did you foreclose in 1875 ? A. 
Altogether we foreclosed about $600,000 worth. 

Q. Altogether you have foreclosed $600,000 in mortgages ? A. 
Yes, sir. 

Q. How much of it has the company purchased ? A. It has bought 
in all of it. 

Q. And now owns it? A. Yes, sir. 

Q. Has not sold any of it ? A. No, sir. 


100 


By Mr. W eiant : 

Q. Are you not bound to dispose of it within five years under the 
law? A. Yes, sir; but I think up to three years ago we did not 
have a single piece of real estate on our hands. 


By Mr. Moody: 

Q,. And now you have about $600,000 worth of it? A. Yes, sir. 

By Mr. Moak ; 

Q. Where is it situated ? A. The bulk of it is in Brooklyn ; some 
is in New York city and some in New Jersey- 

Q. How much is in New Jersey? A. I should say $40,000. 

Q. Is this all the real estate the company owns ? A. Yes, sir. 

Q. Is it rented? A. Yes, sir. 

Q. About what rent does it bring in, taking the whole $600,000 ; 
how much does it bring in deducting taxes ? A. I think it brings- 
us about six per cent. 

Q. Have you made any estimate? A. No, sir; I think it brings- 
us six per cent without deducting taxes; I think it is abont five and 
aJialf or five per cent after deducting taxes. 

Q. Are you willing to say that the entire $600,000 brought in 
during the year 1876 $30,000 in rent, exclusive of taxes? A. Yes r 
sir; I should think it did. 

Q. Have you any memorandum, and have you ever figured it up 
to see? A. Yes, sir; I have figured it up; and I talked with the 
book-keeper about two weeks ago, and he estimated it to be about six 
per cent. 

Q. Estimating is one thing, figuring up is another ? A. He fig¬ 
ured it up to six per cent. 

Q. You have not figured it up yourself to know? A. No, sir ; 
they are most of them dwelling-houses that bring from five to seven 
per cent; if I am not sufficiently accurate, I am trying to be as care¬ 
ful as I can. 

Q. Has the company made any effort to sell any of its real estate? 
A. No, sir. 

Q. Why not ? A. Because we think the times are bad; if we 
were offered a price it would stand us in to-day, we would not sell. 

Q. Why not ? A. Because we think in one or two years it would 
increase in value; that is the sense of the finance committee. 

Q. If that were so, why did you not give the owners the benefit 
of it and allow their mortgages to run ? A. Well, they have received 
every consideration from our company. 

Q. It is a pretty hard thing to foreclose a mortgage these hard 
times, and sell a poor man’s house, where there is a chance of its- 
coming out right in the end ? A. We have used every consideration 
that we can, and where there is a chance of our getting our pay we* 
have not foreclosed. 

Q. Are you acquainted with the value of real estate in New York 
or Brooklyn ? A. Very little. 


I 

< t 


101 


By Mr. Weiant: 

Q. I have understood you to state, if I am correct, that the face 
of the mortgage and the accumulated interest you bought was about 
$600,000 ? A. Yes, sir. 

Q. That was the face of the mortgage and accumulated interest ? 
A. Yes. sir. 

Q. How much did you buy it for on the aggregate ? A. I cannot 
tell. 

Q. Can you give us a general idea? A. I cannot. 

Q. Not of the aggregate amounts you paid? A. No, sir; our 
attorneys come in and notify us that they have bought a piece of 
property, and we notify the board, but I very rarely know how much 
they bought it in for. 

Q. Ho you mean to tell me you don’t know ? A. They come and 
ask me, shall we proceed on the bonds ? 

Q. Ho you mean to say you don’t know what the property is 
bought in for? A. Yes; they tell me eveiy time. 

Q. Then you do know? A. Yes; I do every time. 

Q. Caidt you give us an idea of what it was, or about what ? A. 
1 think about seventy-five per cent. 

Q. Now, you don’t mean to say you have no recollection whatever 
•on the subject ? A. No. 

Q. You have some general recollection? A. Yes, sir. 

Q. Well, that is all I ask you ; the best you can give? A. Some¬ 
times it sells up very close. 

Q. Can you give us in round numbers ; you say you bought it at 
se verity-live per cent ? A. Well, I know of a house in Brooklyn 
where it was valued at $6,000, and sold for $1,000 ; that struck my 
mind, and when the attorneys asked me if they should sue on the 
bond, I ^eaid yes. 

Q. I want to get at the aggregate amount ? A. I should say about 
seventy-five per cent; between $400,000 and $450,000. 

By Mr. Moak : 

Q. Hid you state you had $700,000 in government securities 
;alone ? A. United States ? 

Q. Yes? A. Between $600,000 and $700,000. 

By the Chairman : 

Q. Have you any written statement with you ? A. No, sir. 

By Mr. Moak : 

Q. You said last night you had $700,000 in government securi¬ 
ties? A. Yes, sir. . 

Q. You have that amount in United States securities? A. les, 

sir. 

Q. And about $850,000 in Brooklyn and New York city bonds ? 
A. Allow me to make a statement; we have in United States securi¬ 
ties, and in. New 1 ork city, State and Brooklyn bonds, altogether, a 


102 


little over $1,600,000 ; and Brooklyn bonds are a little heavier than 
the government. 

Q. You say you have about $850,000 in Brooklyn and New Y ork 
State bonds; A. Yes, sir. 

Q. What do you mean, the bonds of the State? A. Yes, bonds 
of the State. 

Q. And the balance of that amount is in New York or Brooklyn 
city bonds ? A- Yes, sir. 

Q. And you had $70,000 in demand loans? A. Yes, sir. 

Q. What do you call demand loans? A- Well, if you have a 
government bond, and you want to get a small amount loaned on it, 
you bring it to us, and that is what is called a demand loan. 

Q. It is an amount of money to an individual secured on some 
kind of stock? A. Yes, sir. 

Q. What kind of stock do you take ? A. Only such as we could 
buy. 

Q. You state here that you have $125,000 in deferred premium ; 
what do you mean ? A. They are premiums where they are not 
annual—either quarterly or semi-annual—and where the company 
is charged with the full premium, and they have to credit themselves 
with the amount they have not received ; iet me give an illustration: 
suppose you had a policy on which you paid $100 a year, $25 quar¬ 
terly. your deferred premium would represent $75, less ten per cent 
for collection, or less $7.50. 

Q. You spoke of $70,000 in premiums in course of transmission ?. 
A. Those are premiums in the hands of the agents, or in the course 
of collection, or in hand. 

Q. At what rate does your company allow agents a commission 
for first insurance ? A. That is the hardest question you have asked 
me ; our rate is thirty per cent, and seven and-half per cent for five 
years on renewal; suppose you are an agent and insure me; my 
premium is $100; our regular way will be to allow you thirty per 
cent the first year, and seven and-half per cent for five years, and 
after that his interest will cease; we allow our general agents five 
per cent on that the first year, making thirty-five per cent. 

Q. You allow the two thirty-five dollars ? A. Yes, sir. 

Q. Has the general agent any thing after that? A. That de¬ 
pends ; sometimes it is one per cent and sometimes two and a-half 
per cent. 

Q. Why does it vary ? A. It depends upon the caliber of the 
agent. 

Q. It is a sliding scale, at the pleasure of the company ? A. Yes, 
it is a sliding scale; I supposed you were going to ask this, and was 
unwilling to answer it. 

Q. Why ? A. Because we have a number of agents, and if they 
know any one is getting more than they are, they want the extra. 

Q. Well, now, in regard to the expense of foreclosure on the vari¬ 
ous mortgages; do you keep an account of the expenses met by the 
company for foreclosure ? A. The company does; I do not. 

Q. Can you give us an approximate statement of what it is ? A. 
No, sir; I never looked at it at all. 



103 


Q. Why not ? A. I can’t say why not, but I have not. 

Q. Is it a subject that you don’t consider of the slightest conse¬ 
quence, what the charges' are ? A. They are reputable men, and 
they always tell me what their expenses are. 

Q. Taxable costs, you mean ? A. Yes, sir. 

Q. TV ell, suppose the taxable costs are $600, while the real costs 
are not $300 ; do you allow the taxable costs ? A. Yes, sir. 

By Mr. Moak : 

Q. You allow the taxable costs? A. Yes, sir. 

Q. Do you allow them any fees beyond the taxable costs? A. No, 
sir; they could swindle us most tremendously if they desired. 

By Mr. Skinner : 

Q. How could they swindle you? A. Why, they could say the 
taxable costs were far in excess of what they were. 

Q. Do they send in the vouchers ? A. Yes, sir. 

Q. And how could they swindle you unless the vouchers were 
fraudulent? A. We assume they are honorable men, and pay the 
taxable costs; we don’t pay any more than that. 

By Mr. Weiant : 

Q. Well, as to salary ? A. We don’t pay them any salary. 

Q. Nothing but the fees they receive? A. That is all. 

Q. Have you legal counsel ? A. Yes ; Fullerton, Knox & Crosby 
are our counsel. 

Q. How much were they paid in 1874? A. About $3,000. 

Q. In all? A. Yes, sir. 

Q. Well, how much in 1875 ? A. It was reduced to $2,000. 

Q. And in 1876 ? A. It was $2,000. 

By Mr. Moody : 

Q. In the statements you have given us here you said you paid 
two attorneys and counsel $6,520; state how you pay it, why you 
pay it, and to whom you pay it ? A. We have two firms, Sewell & 
Pierce, and Fullerton, Knox & Crosby; to both together we have 
paid that amount. 

Q. To both firms? A. Yes, sir. 

Q. Well, what is this paid for, if you have other attorneys to do 
the foreclosing ? A. We never consult them; they simply do the 
real estate. 

Q. In what respect ? A. Well, that is in the foreclosure of mort¬ 
gages and the examination of the titles for loans. 

Q. What did you pay these men $6,520 for ? A. I will tell you; 
suppose you come to me and had a policy in the company and de¬ 
sired a loan on the policy, I would send that down to the lawyers to 
know whether we could legally loan on it and take their advice; if 
we could loan you on it, I would loan you on it. 

Q. Then you are not governed by the finance committee ? A. 
Not on policies; the finance committee allowed us to loan over $500 


104 


on policies; up to four years ago they allowed us to loan any sum 
from the reserve, but four years ago they instructed us not to lend 
under $500 ; our finance committee make an examination once in 
three months, and they used to find it very difficult to examine the 
policy loans, and then they instructed us not to lend less than $500; 
prior to that we would lend any sum. 

Q, l r ou asked them whether you can lend ? A. Whether it is 
legal or not; it is an unsettled point whether we can lend on a wife’s 
policy. 


By Mr. Moak : 

Q. Is not lending on policies entirely illegal ? A. No, sir; say 
you have a policy on your life payable to your executors, and you 
say to me, Mr. Freeman, I cannot pay the premium; will you pay it 
for me; I go down to the actuary first, and find out what your reserve 
is; finding that out, I would send down to the counsel to know 
whether yours is a policy that we can lend on; that being the case, 
we would lend you enough to pay the premium, in order to keep it 
in force for three months. 

Q. How much have you loaned on policies ? A. It is a small 
amount; about $30,000. 

Q. You said you could not lend less than $500 ; how do you mean 
when you say you lend them enough to pay the premium ? A. I was 
telling you what was the usual practice of the company up to five 
years ago; since then we only loan $500 and upwards; I would say, 
up to five years ago every company used to lend on their policies ; 
there were several decisions in regard to loaning on a wife’s policy, 
and our attorneys called our attention to it, and we notified the 
parties to pay up their loans, and they did so. 

By Mr. W eiant : 

Q. Do you consider, under the law, you are authorized to loan 
money on policies ? A. Yes, sir; on anything but a wife’s policy. 

Q. Do you consider it a safe investment ? A. Just as safe as the 
company is; if the company is good, an investment based on the 
strength of the company is good. 

By Mr. Moak : 

Q. To what extent would you loan on policies ? A. From forty 
to seventy per cent, according to the nature of the policy. 

Q. From forty to seventy per cent of what ? A. Of the reserve. 

Q. You said you paid those two attorneys ; you have not answered 
the question what you paid them $6,520 for; you said that was an 
expense; I want to know what the attorneys do? A. Well, any 
time we want information in regard to the law, we send right down 
to one or other of the counsel. 

Q. Why don’t you have only one firm; why divide it up between 
two ? A. I will tell you; we did have but one firm up to three 
years ago, and we had a case where the other counsel were engaged, 
and we liked them very much indeed and our finance committee 
suggested that they should be employed. 


105 


Q. \ on had a ease where they were engaged against you or for 
you ? A. I think for us ; our finance committee suggested that we 
should engage those gentlemen; we did so; since that time it has 
been divided ; three or four years ago we paid more than that, but 
for the last three years we have been cutting down all expenses. 

Q. Four years ago how much were the counsel fees? A. I should 
.say from $7,000 to $9,000. 

'Q. Does this $6,520.02 include all you paid for counsel fees last 
year? A. Yes, sir. 

Q. For every thing? A. Yes, sir. 

Q. And every purpose? A. Yes, sir. 

By Mr. Moody : 

Q. Over and above the taxable costs ? A. Yes, sir. 

Q. Did you pay their charges for services or a salary ? A. A 
salary, so much a year; and the salaries of both were reduced last 
year. 

Q. Iiow much do you pay Fullerton, Knox & Crosby? A. $500 
a year. 

Q. And how much do you pay the other firm ? A. Three thousand 
dollars. 

Q. Well, then how do you get this $6,520.02 ? A. They were cut 
down by the finance committee. 

Q. You say it is $6,520.02; I want to get at how you make it; 
you say you paid Fullerton, Knox & Crosby how much, in 1870 ? 
A. Their fees were $3,000. 

Q. Was that their salary? A. Yes; their salary per annum. 

Q. That is what you paid them in 1876? A. Yes, sir; and the 
other gentlemen were $5,000; then they were both cut down during 
1876 in the latter part of the year, and the aggregate came up to 
that sum. 

Q. The aggregate amounted to that sum ? A. Yes, sir; next 
year our counsel fees will be exactly $3,500. 

Q. It is a little amusing to me to see that you can figure that 
amount down to $6,520.02 ; I was trying to see which of the two 
•counsel got the two cents ? A. I don’t know. 

Q. I don’t see upon the basis you give how you figure up that 
.amount or anything like it; one firm you say got a salary of $5,000, 
.and the other firm got a salary of $3,000 ; that would make $8,000, 
if both were paid ? A. They were both reduced in 1876, 

Q. To what were they reduced, say the one that had $5,000? A. 
To $3,000. 

Q. How much was the one that had $3,000 reduced to? A. 
Reduced to $500 ; so that you see in the year 1877 we will pay them 
just $3,500. 

Q. What did you pay them for the year 1876 ? A. It is down 
there $6,520.02. 

Q. How, you have got here among your items, and I will get back 
to the salaries, a salary of $2,500 to your president? A. Yes, sir. 

Q. That is the regular salary paid him for how many years ? A. 
Ever since he has been in the company. 


106 


Q,. And how long has he been in the company ? A. Since the 
company started. 

Q. Then they gave him $10,000 upon a per centage ? A. Yes, sir. 

Q. What is that per centage upon ? A. That is two per cent net. 

Q. TJpon what ? A. On the income. 

Q. On the income of the company ? A. Yes, sir. 

Q. Then your income was $500,000, as you make it; how much 
was it in 1876 ? A. It is for our income, two per cent on the 
income, less losses, dividends and indebtedness. 

Q. How much was your income, less those three items ? A. Half 
a million of dollars. 

Q. Does your president receive any other sum than those two 
sums from the company, either directly or indirectly ? A. He does 
not. 

Q. Or any member of his family? A. Ho, sir. 

Q. Who is the president? A. Pliny Freeman 

Q. Is he related to you in any way ? A. Yes, sir; he is my father. 

Q. Is your father connected in any way, with any other insurance 
company, either fire, marine or life ? A. Ho, sir; with none. 

Q. In any shape, either as manager, agent, director, or anything 
else? A. Ho, sir; lie is not. 

Q. Has he been, since your company has been in existence, to your 
knowledge ? A. Ho, sir. 

Q. What is your salary ? A. It is $2,500 salary, and one per 
cent. 

Q. How, have you received, or any member of your family, either 
directly or indirectly, any money from the assets of your company, 
in addition to your salary ? A. Hot a penny. 

Q. Hever? A. Ho, sir 

Q. Are you connected in any way with any other company ? A. 
Ho, sir. 

Q Either as officer, director or agent? A. Ho, sir; neither as 
agent or officer, directly or indirectly. 

Q. You spoke of $6,333 33 paid to the managing director—who 
do you call the managing director ? A. William Sturgiss. 

Q. Where does he reside ? A. Hew York city. 

Q. How would you define his powers and duties ? A. Letters 
coming in, in relation to agencies, are referred to him. 

Q. Anything else ? A. He has exclusive charge in relation to 
the agencies. 

Q. Anything else? A. Yes; when applications are received he 
examines them; we have a doctor examine them, and Mr. Sturgiss 
examines them. 

Q. Does he have his office in the office of the company? A. Yes, 
sir. 

Q. Does he devote his entire time to the company ? A. Yes, sir. 

Q. Have you or the president any other business out side of the 
company ? A. Ho, sir. 

Q. Do you have an actuary ; is he paid a regular salary ? A. Yes, 
sir. 

Q. Who is your actuary ? A. Mr. Robert Sewell. 


107 


Q. Does he devote his entire time to the business ? A. Yes, sir. 

Q. Is he in the office daily ? A. He is supposed to be there from 
nine in the morning until four o’clock in the afternoon. 

Q. My question was not what he is supposed to do, but is he there ? 
A. If he is not there he ought to be. 

Q. That does not quite answer my question, my question is, is he 
there as a rule each day ? A. That is his only business. 

Q. Is he in any way connected with the tirm of lawers the Sewells ? 
A. No, sir; no relation ; Mr. Sewell, the lawyer, is an American, 
and our actuary is an Englishman. 

Q. You spoke of two medical examiners ; does the company have 
two in their employ that are paid a salary ? A. Yes, sir. 

Q. What do you pay them ? A. We pay one $3,500, and I think 
the other gets $2,500. 

Q. That makes $6,000; you said $5,000 last night ? A. Then 
one has $3,000 ; allow me to correct that statement; I was in doubt 
whether our regular doctor, Doctor Parker, gets $3,500 a year, the 
other doctor, Doctor Trei, I call him the policy clerk, but we put 
him in the line of the doctors ; a policy comes in and it is sent to 
the doctor, and he knows the man who made the examination ; is on 
his book, and he knows his standing; it is then sent to the policy 
department, and he examines it, not knowing what Doctor Parker 
does ; he approves or disapproves of it; after that it is passed over 
to Mr. Sturgiss, the managing director of agencies ; sometimes he 
don’t know whether he likes the risk or not, and he will come and 
consult with me or other parties; the application goes through three 
hands, and if one out of the three decline it, the risk is not accepted; 
that is, the categorical statement of the examination which the appli- 
cation undergoes. 

Q. Have you given every dollar of the expense paid out by your 
company in any way during 1876 ? A. Yes , sir. 

Q. You incurred no expense but those paid, and those are all you 
did pay? A. Yes, sir. 

By Mr. Weiant : 

Q. In your experience, have you ever known of a case of collu¬ 
sion between a medical examiner and a person desiring a policy ? 
A. I have not with our own doctors. 

Q. With any doctors? A. Yes, I have. 

Q. In what way did that come about; how did another doctor 
come in? A. Well, take a case; supposing a doctor in Albany 
examined a risk, our doctor knowing the doctor in Albany to be on 
his book would suppose it was all right; if the man died we might 
subsequently have reason to believe that the doctor in Albany knew 
that the man was a bad risk. 

Q. That never occurred at the home office ? A. No, sir. 

By Mr. Moody : 

■ Q. Is there not a dividend of live per cent paid to the officers of 
the company ? A. No, sir. 


108 


Q. Only three per cent? A. Yes, sir. 
Q. That is all ? A. Yes, sir. 


By Mr. W eiant : 

Q. Do you hold yourselves responsible for any collusion on the 
part of the local examiner and the policyholders ? A. Yo, sir ; if 
we think we can defend a risk we consult the lawyers. 

Q. Do you hold yourselves responsible for any collusion on the 
part of the local physician, as you stated; say if a case arose in the 
city of Albany, do you hold yourselves responsible for any repre¬ 
sentation he might make in taking the risk? A. I think the com¬ 
pany would be bound. 

By Mr. Moak : 

Q. I understood you to say you never had a case in your com¬ 
pany ? A. I was trying to think; there was a case, about a year 
ago, in the neighborhood of Syracuse, where we found the doctor 
was in collusion. 

Q. Is it not true that you set that up as a defense, that you were 
not responsible for misrepresentations or fraudulent acts of the local 
physician? A. Yo, sir; we have never set it up; if our doctor 
passes a risk, and we write to him and he says that risk is all right, 
and the man dies, we pay the claim, even if we think the doctor is 
wrong. 

Q. Then you hold yourselves responsible for his acts? A. Yes, 
sir, we do ; and I guess it is the universal practice; if we have rea¬ 
son to believe the doctor has deceived us we remove him at once. 

# 

By the Chairman : 

Q. That is their general practice? A. Yes, sir; if we can prove 
-conclusively that the doctor connived at the fraud, we not only do 
not pay the risk but we bring him before the medical association 
and have him removed. 


By Mr. Moody : 

Q. Is that all you would do ? A. That is all we could do; we 
would not pay the policy. 


By Mr. Moak ? 

Q. You speak here of fourteen clerks receiving $25,550 ; have 
you that number of clerks in your employ? A. Yes, sir. 

Q. What salaries do you, in fact, pay them ? A. I could not 
mention each salary in detail. 

Q. Do you, in fact, pay these fourteen clerks $25,550, or is part 
of it used for something else ? A. Yo, it is not. 

Q. The whole amount is paid to the clerks ? A. Yes, sir. 

Q. And in good faith? A. Yes, sir. 


109 




Q. Does this $67,822.21, which you gave as the aggregate expense 
of the officers in 1876, cover the entire expense of the company? 
A. Yes, sir. 

Q. Everything? A. Yes, sir. 

Q. No other money is paid to any other person for any other pur¬ 
pose ? A. No, sir. 

Q. Except those you have given here? A. No, sir. 

Q. Now, how many policies had your company in existence at 
the commencement of the year 1876? A. About 11,000. 

Q. Covering an insurance of about how much in amount ? A. 
About twenty millions. 

Q. How many policies did you issue during the year 1876 ? A. 
I should say about 2,500. 

Q. Covering an insurance of about how much ? A. About 
$5,000,000. 

Q. How many policies in number lapsed or were lapsed ? A. 
About the same number. 

Q. The same number that you insured? A. Yes, sir. 

Q. In other words, as many lapsed as you issued? A. In other 
words, at the end of the year there were about the same number as 
at the commencement. 

Q. Of the live millions that lapsed, how many have been restored ? 
A. This year ? 

Q. During 1876? A. That lapsed in 1876, you mean? 

Q. That began in 1875, early in the year, and went right along? 
A. Any time a man wants to revive his policy he can do so ; I don’t 
know the number. 

Q. Have you no idea of the number of policies restored ? A. Our 
actuary can tell you a great deal better than I can. 

Mr. Sewell.— In 1876 there w r as about forty; since 1877 com¬ 
menced, we restored about twenty-five. 

Q. Well, on the average you restored from fifty to sixty-five, did 
you not ? A. Yes, sir. 

Q. How much would they represent in amount ? A. Two thous¬ 
and dollars each, I should say. 

Q. That would be about $100,000 or $120,000 ? A. Yes. 

Q. Then the balance of the $5,000,000 that lapsed is, so far as 
anything at present appears, lapsed, gone? A. Well, no; part of 
them died , and we paid the loss; part of them we bought, they sur¬ 
rendered their policies. 

Q. Now, how many died, or in other words, how much an amount 
did the loss from death amount coin 1876 ? A. We paid about 
$320,000. 

Q. In losses ? A. Yes, sir. 

Q. Of these losses, how many of them that were claimed as losses 
has payment been refused by the company on them ? A. A very 
small amount. 

Q. Give us the number ? A. I should say three. 

Q. Have you had any litigation? A. Yes, sir. 

Q. How many ? A. I should say three cases. 

Q. Can you recall a case ? A. Yes, sir ; we had a large policy in 


110 


St. Louis of $20,000 on the life of the proprietor of the Lindell 
House. 

Q. He died ? A. Yes, sir; he died about two months after he 
was insured. 

Q. What was the claim of the defense ? A. That was the defense 
claimed; they set up a claim, and we set up a defense that the man 
was not in good health when he was insured. 

Q. Has that been determined yet? A. Yes, sir; it was com¬ 
promised. 

Q. How compromised ? A. We paid $16,000. 

Q. You paid $16,000 ? A. Yes, sir. 

Q. As to the facts, what were the facts according to the best in¬ 
formation you had ? A. The facts were our doctor, Doctor Holman, 
• did not examine the man ; the agent came down and said the 
Doctor was out of town; I think Doctor Jordan examined the 
man; the risk came down and Dr. Jordan’s examination was ap¬ 
proved, the premium was paid, and about two months after the man 
died. 

Q. Of what disease? A. I don’t know; the man died two 
months after; we thought it was strange, and sent up the regular 
examiner, Doctor Holman, and we found he was not out of town as 
the agent represented; that he was in town ; we wrote to him, and 
he wrote us that this gentleman had been brought to him to be ex¬ 
amined, and he knew lie was a bad risk; that he had disease of the 
liver; that lie was his consulting physician, and that he had notified 
him that he could not live six months. 

Q. Why did you not take the precaution of telegraphing to St. 
Louis rather than appoint a special surgeon to make the examination 
—it strikes me that it was the thinnest swindle I ever heard ? A. 
Well, we lost $16,000. 

Q. Did you simply take the agent’s word that he was out of the 
city? A. No; the other doctor was a reputable physician and was, 
doubtless, deceived. 

Q. Well, you took the agent’s word ? A. Ho ; we took the doc¬ 
tor’s certificate. 

Q. You say the agent took the trouble of coming to Hew York, 
and say Doctor Holman was not there? A. Yes; we took his word, 
so far as that was concerned, and we looked at the paper and saw he 
was examined by a reputable physician. 

Q. He had the papers with him ? A. Yes, sir. 

Q. And you never took the trouble to look into it until the loss 
occurred ? A. Ho, sir. 

By Mr. Sklnner : 

Q. Did you retain that agent ? A. Ho, sir. 

By Mr. Moak : 

Q. Is that the mode you conduct your insurance company ? A. 
The man who examined the risk was a reputable man, but did not 
happen to be the physician of th z family. 


Ill 


Q. Do not your policies request him to state who the family phy¬ 
sician was ? A. That question is not answered one time in ten. 

Q. Do you issue policies without that? A. Yes, we pay no re¬ 
gard to that; because we find if we wrote to the family physician, 
and the man is a bad risk, he will cover it up. 

Q. There are cases where doctors are honest, are they not ? A. I 
don't say that; of course there are cases where doctors are honest. 

Q. I don’t believe they are all dishonest, do you? A. No; I 
don’t either. 

Q. Then why don’t you require the question to be answered, and 
get what information you could from that source ? A. Because we 
don’t find it of any avail ; I think in the new forms we don’t have 
that now. 

Q. You know of any other company that does not require the 
applicant to state who the family physician is? A. Yes, sir; the 
majority of them. 

By Mr. Weiant : 

Q. You stated that you set up a defense when they sued you? A. 
Yes, sir. 

Q. Who were your attorneys in the case ? A. Parties in St. 
Louis. 

Q. What were their names ? A. I don’t remember their names. 

Q. You don’t know the names of the parties who defended you ? 
A. No- 

Q. What was the amount of the policy, did you say? A. Twenty 
thousand dollars. 

Q. What was the defense ? A. Our defense was, the man was in 
bad health when he was insured. 

Q. Did you simply set up that he was in bad health, and was that 
the defense? 4. Misrepresentation in the application was the de¬ 
fense. 

Q. Do you not hold yourself responsible for the act of the agent 
in that matter ? A. No. 

Q. You do not ? A. No; I don’t think our agent knew any thing 
about the man. 

Q. But didn’t he bring down the application ? A. Yes, sir ; he 
brought down the application. 

Q. From the medical examiner? A. Yes, sir. 

Q. Employed by you ? A. No ; he did not employ our medical 

examiner. 

Q. But you accepted him ? A. Yes, sir. 

Q. And’you set up a defense that you were imposed upon? A. 
Yes, sir. 

Q. After knowing all the facts i A. Yes, sir. 

By the Chairman : 

Q. On what ground did you compromise it; why did you compro¬ 
mise it? A. We compromised it at the suggestion of our attorney. 

Q. What defense did they give you ? A. They said the probabil- 


112 


ities were we would lose the case before a jury, and they recom¬ 
mended us to compromise on $16,000. 

Q. Was there any other reason that you had ? A. No, sir. 

Q. I didn’t know but if you contested cases of that sort, it adver¬ 
tises it through the country, and gave the public to understand that 
you were repudiating your contract ? A. They might bring that 
out, but we don’t pay any attention to it. 

By Mr. Wei a nt : 

Q. Did you not interpose the defense for the purpose of getting a 
compromise ? A. No, sir ; we did not do it for that purpose ; because 
I honestly believe it was a clear case of fraud. 

Q. It was perpetrated by your agent? A. No, sir; by the man. 

By Mr. Coulter : 

Q. Who was it that said the doctor was out of town ? A. Our 
agent. 


By Mr. Moak : 

Q. You spoke of other cases you defended, state those ? 
A. There was a case in Syracuse called the Reil case, where we in¬ 
sured a man on a small policy; our agent tendered the man the 
policy and the man declined to take it; about two months-after that 
the man sent word to the agent that he would take the policy if he 
would deliver it to him; the agent jumped into his buggy and rode 
to this man’s house and found he was sick in bed; he delivered the 
policy to him and took his money; two months after the man had 
been insured the man died, and we contested that case. 

Q. What defense did you set up in that case? A. That the agent 
delivered the policy two months after it had been issued, and after 
the man had declined to take it * it was clear fraud as I regarded it. . 

Q. The man had never accepted the policy before ? A. No, sir. 

Q. Well, go on ? A. The agent delivered the policy and the man 
took it, and two days after he took it he died ; he never got otf his 
bed; we got ready to pay that case because we did not know any¬ 
thing about the particulars ; but some one who w r as acquainted 
with the office was riding in the car and heard about the case; he 
sent word to us and we sent a detective out there and learned the 
facts, and we declined to pay it, and have not paid it yet. 

Q. What was the defense ? A. Our defense was, the man was sick 
when he took the policy and the agent had no right to deliver it. 

Q. What did you do with that agent ? A. He is no longer con¬ 
nected with us. 

Q. You removed him immediately? A. Yes, sir. 

By Mr. W ejant : 

Q. Tou placed the policy in the agent’s hands? A. Yes, sir.. 

Q. And lie delivered it? A. Yes, sir; but he had no* right to do 
so. 


113 


Q. And then you set up that you were not liable because be bad 
no right to deliver it ( A. Well, was it right; the man was insured 
two months before, and when the agent went to deliver the policy be 
declined to take it; after the man was taken sick be sent to the 
agent and said, I will take the policy, and the agent delivered it; 
two days after that be died. 

Q. He was the agent for your company, and you were responsible, 
were you not ( A. Well, that is not settled yet; there is a clause in 
the policy that if the party is not in good health when the policy is 
delivered the policy is null and void; in other words, we assume the 
party is in the same state of health when he received the policy that 
he was when the application was made out. 

By Mr. Moody ; 

Q. Suppose a man makes his application, the application is ap¬ 
proved, the policy forwarded to the agent, and it is in the hands of 
the agent to be delivered; he notifies the party that he is ready to 
deliver it, and the party says in a day or two I will call in and re¬ 
ceive it, and the next day he is injured, or is taken dangerously sick, 
and he sends for the policy, would you then claim that you had the 
defense that the agent ought not to deliver it? A. Yes, sir. 

Q. You think he ought not? A. Yes, sir; do you think if a party 
comes in and says, I will take this in two or three days, and is taken 
sick in the mean time that he would be entitled to it ? I honestly 
don't think that if the man was taken sick in those days he would 
have a right to it. 

By the Chairman : 

Q. What is the custom of your company; what is the custom 
with you m regard to the policies; does the policy insur a man when 
the application was taken out or when the money was paid? A. 
When the money is paid. 

By Mr Moak : 

Q. Don’t it date back, as to the date of the policy ; suppose a 
policy is dated the first day of April, and issued from your office that 
date, and suppose he don't take it and pay until the first of May, you 
say you don’t regard him as insured until he pays, the next year do 
you date his renewal from the first of April? A. Yes, sir. 

Q. Then you get a month’s insurance out of a man without insur¬ 
ing him ? A. Yes, sir; there’s a clause in the policy stating that a 
n^m must be in good health when the policy is delivered to him ; we 
try to deliver it to him in two or three days. 

By the Chairman 

Q. A great many young people of small means, or’young married 
men, may want to take out a policy, and make application, and when 
the time comes around they have not the money, as two or three 
hundred dollars is a good deal to raise—the question arises, supposing 
they don’t take the policy, are they insured ? 

Mr. Moak— Oh no, of course not. 

8 


114 


By Mr. Moody : 

Q. Is that the custom in other companies? A. Yes, sir. 

Q. Well, take this case; say a man in San Francisco desires to 
take out a policy, he makes application to your agent, has a medical 
examination and is sent to you and you have to communicate to him 
that he is accepted ? A. We don’t do that. 

Q. Well, you write to him and that policy may be two or three 
weeks in getting there ? A. As a general rule, in long distances, 
they request us to date the policy ahead; we do so, from ten days to 
two weeks. 

By Mr. Moak : 

Q. You spoke of still another case; what was the other case? A. 
I could not give it you. 

Q. How many suits, on average, has your company defended 
during the five years past ? A. I guess an average of three a year 
would cover all of them. 

By Mr. Moody : 

Q. How many defenses do you sustain on the average ? A. We 
defend very few claims on the average. 

Q. Flow many of these three cases do you sustain in the course of 
the year ? A. 1 guess we win about one out of three. 

Q. How many do you compromise ? A. About half, I should 
say. 

Q. How many of the death claims do you compromise in the 
course of a year that are not defended ? A. Very few; we will 
either pay the whole claim or we will not pay it at all; we notify 
our lawyers, and if they advise us to compromise we compromise, 
no matter what we think about it. 

By Mr. W eiant ; 

Q. What attorney did you send your Syracuse case to ? A. Sew¬ 
ell 6z Pierce; they brought an action for an injunction (to prevent 
those parties) commencing a suit against the company. 

By Mr. Lang: 

Q. That is one of the objections made, that as soon as there is a 
loss all sorts of objections are raised, and sooner than fight the case 
the parties compromise; is that so with your company ? A. I 
think that is as mean and as contemptible a thing as can be got up* 

By Mr. Moak : 

Q. You said during the year 1876 there was lapsed in various 
ways, and by loss in death, about $5,000,000, you thought ? A. Yes, 
sir. 

Q. And you paid $320,(000) in losses? A. Yes, sir; thereabouts. 

Q. Does that include all their losses during the year, or only such 
as you paid? A. It was all the losses we paid. 


115 


Q. That leaves about $-1,680,000 ; of what was that composed ? 
A. Well, we paid $200,000 for surrenders. 

Q. You paid surrenders; do you mean the surrender value? A. 
Parties apply for cash value. 

Q. Do you have any one engaged in procuring them ? A. No; we 
don’t want them. 

Q. Was any application made to those parties requesting them to 
do so ? A. No, sir. 

Q. It was a voluntary application on their part? A. Yes, sir; and 
we have spent a good deal of money in sending persons to them to 
induce them to give (keep) up their policies, because the strength of 
a company depends upon the premiums coming in, and as long as a 
company is reasonably strong it can stand surrenders; but I think 
every policy surrender, no matter for what reason, it is a loss to the 
company. 

By Mr. W eiant : 

Q. Do these policies provide that the parties holding them shall 
absolutely have the right to a surrender value ? A. No, sir. 

Q. It is discretionary with the company ? A. Yes, sir. 

Q. The surrender value is not fixed by any absolute computation ? 
A. Yes (no), sir. 

Q. But it is discretionary with you ? A. Yes, sir. 

By Mr. Moak : 

Q. You paid that $200,000 for surrender value; how much did it 
represent in insurance ? A. I should say it represented about 
$1,500,000. 

Q. What was the balance of the five millions; what did that 
represent in surrender value ? A. That was nothing. 

Q. Those were policies that lapsed, with no attempt to revive 
them, and were absolutely gone ? A. Yes, sir. 

Q. That would leave about three millions absolutely lapsed during 
the year? A. About. 

Q. What would be about the annual premium, say upon the 
$3,000,000 ? A. I should say the policies would average thirty dol¬ 
lars apiece ; about $120,000, I should think. 

Q. About $120,000 ? A. Yes. 

Q. What would be the cash surrender value of the $3,000,000? 
A. The cash surrender of that would be about $50,000 or $60,000, 
without the reserve. 

Q. How much, including the reserve? A. Well, I made a mis¬ 
take ; that includes the reserve; that would be about what we would 
pay for the policies. 

By Mr. Wei ant: 

Q. You said it was discretionary with you to pay that ? A. Yes, 
sir. 

Q. I want to know by actual computation wdiat they are worth ? 
A. Will you allow me to ask the actuary? A. Yes. 


116 


Mr. Sewell [actuary]—I could not tell; it would be a rough 
computation, indeed. 

Q. You have some knowledge of the polices lapsed? A. Yes; 
but I don’t keep an account of the reserve. 

Q. Well, what would be the value of the policies lapsed? A, 
That is the reserve; their value. 

By Mr. Moody : # 

Q. Is that the reinsurance reserve ? A. Yes, sir. 

By Mr. Weiant: 

Q. There is the actuarial computation, and then there is an addi¬ 
tion, is there not 1 A. No; the reserve is the actual value of the 
policy ; the reserve is a mere technical expression used to represent 
the value of the policy. 

By Mr. Moak : 

Q. That is what you could reinsure them for? A. Yes, sir. 

By Mr. Weiant : 

Q. Including the reserve, give us the actual value on that $3,000,- 
000? A. Well, I should say it would be about $50,000 ; that is the 
amount on the three millions lapsed ; that would be the reserve we 
charge ourselves with on paid-up policies. 

By Mr. Moak : 

Q. Do you issue any paid-up policies on those? A. l*es, sir. 

Q. Did you, in 1876? A. Yes, sir. 

Q. To what amount ? A. About 500 in number. 

Q. How much in amount ? A. I should think about $300. 

Q. Each? A. Yes, on the average. 

Q. And 500 in number? A. Yes, sir. 

Q. Do you call that 500 among the number you call surrendered 
policies ? A. No, sir. 

Q. Those are not included in what you call surrendered policies ? 
A. No, sir ; they are what we buy for cash. 

Q. You don’t include that in the number? A. No, sir. 

Q. How much insurance did those policies, where you issued 
paid-up policies, represent in amount ? A. Just what the reserve 
on the running policies would be. 

Q. Well, here are 500 policies you issued paid-up policies on? 
A. Well, say $300 each. 

Q. How much was the aggregate of the amount paid for it? A. 
One hundred and fifty thousand dollars. 

Q. I don’t quite get your idea ? A. Why, there are 500 policies 
at $300 each. 

Q. That is what you gave them? Q. Yes, sir. 


117 


Q. How much did they represent on their face before ? A. I can¬ 
not tell; the policy may be ten, twelve, or three years old, but they 
dime in for a paid-up policy; I guess they will estimate $300 each. 

Q. And that is what you gave them ? A. Yes. 

Q. Can’t you give me some idea how much they would have rep¬ 
resented if they all had died during the year ; how much would they 
represent ? A. I cannot tell; it is purely an actuarial question ; it 
is purely a matter of guess, I should say live times the amount. 

Q. Then these policies would represent from $750,000 to $900,- 
000 ? A. Say about $800,000. 

By Mr. Weiant : 

Q. I understand you to state there was $1,500,000 of surrendered 
policies ? A. 1 es, sir ; mind you, this is not accurate. 

Q. And that the value of these surrendered policies is about 
$200,000 ? A. Yes. 

Q. Now, here is $3,000,000 worth of lapsed policies ? A. Yes, 
sir. 

Q. And you state the value of them is about $56,000 ? A. I will 
deduct something else; we pay $356,000 for loss; that amount was 
to be taken from the policies. 

Q. What policies? A. Well, those are lapsed policies; every 
policy that ceases we called lapsed ; if you have a policy, and don't 
pay the premium it lapses; those that die, their policies lapse. 

Q. We are after policies that are forfeited ? A. We call every 
thing lapsed where the premium is not paid. 

Q. What was the number forfeited ? A. If you will deduct the 
deaths, {and) the value of the surrendered policies, then you get the 
forfeited policies. 

Q* Well, give us an estimate by those terms? A. There were 
surrendered 581, for each of which either the cash value was paid, 
or a paid-up policy was given ; there were thirty-eight matured 
endowments; 360 were never taken by the policyholder, but 
returned without the first premium being paid, and we call those 
canceled ; and 1,254 lapsed. 

Q. How, divide that up, and give us those that were forfeited ? A. 
Why, 1,254 were forfeited, because they got nothing for them. 

Q. How, what was the amount of insurance on the 1,254 ? A. I 
cannot tell you, exactly; our actuary says he should estimate it at 
$2,800,000 or $3,000,000. 

Q. Well, give us your best recollection? A. Well, say $2,800,000 
or $3,000,000. 

Q. According to computation, what would be their value? A. I 
don’t think it would be more than $50,000 or $60,000. 

By Mr. Moody : . 

Q. Do you pay any rents? A. Yes, sir. 

Q. For what? A. For our office. 

Q. You don’t own the building you occupy ? A. Ho, sir. 

Q. What rent do you pay ? A. Twelve thousand five hundred 
dollars. 


118 


Q. Wliat other rents do yon pay ? A. guess we have got four, 
five or six offices, for which we pay an average of $600 each scat¬ 
tered througli(<9^) the States. 

Q. You pay your agents for their office rents ? A. In a few' cases 
we do. 

Q. And give them thirty per cent besides? A. Give them thirty- 
five per cent. 

Q. And you pay them for office rent ? A. In some instances ; w T e 
don’t where we can help it. 

Q. Do you pay for their office furniture besides that ? A. That 
is a diplomatic question ; we never mean to do it if we can help it. 

Q. Do you, or not? A. In some instances we buy furniture. 

Q. In what place is it done ? A. Last year w T e bought furniture 
in Syracuse; we paid $500 or $600 there. 

Q. Paid their office rent as well? A. Yes, sir. 

Q. Did you do so in Buffalo ? A. I think not. 

Q. Have you any office in Chicago ? A. Yes, sir. 

Q. Did you pay office rent there? A. Yes, sir. 

Q. And for office furniture? A. Yes, sir. 

Q. Have you an office in St. Louis? A. Yes, sir. 

Q. Have you an office in Brooklyn ? A. No, sir. 

Q. In Boston ? Yes, sir. 

Q. Do you furnish office rent and office furniture there ? A. Yes. 
sir; our furniture there is worth $150. 

Q. In Philadelphia? A. We pay office rent there. 

Q. And you don’t know whether you furnish furniture there or 
not? A. We have not for five or six years; I think it is an old 
matter, but the company did own the furniture. 

Q. Well, how is it in Washington? A. I don’t think we have any 
office there. 

Q. How t is it in Cincinnati ? A. I don’t think we have an office 
there. 

Q. Have you an office in New Orleans? A. Yes, sir. 

Q. Do you furnish an office and office furniture there? A. I don’t 
know; I think w*e have both there. 

Q. Have you in this city ? A. No, sir. 

Q. Can you tell wdiat your office rents, or the rents you pay, in 
the aggregate amount to ? A. No, I cannot; I never figured them up. 

Q. Do you know what your liabilities in the aggregate amount to, 
including reinsurance? A. Yes, sir. 

Q. Well, state ? A. About $4,000,000, that includes every thing. 

Q. What is the amount of your net reinsurance fund ? A. Do 
you mean the amount of gross assets ? 

Q. I mean what I ask; wdiat is the amount of the net reinsurance 
fund ? A. Three millions eight hundred and fifty-tw T o thousand nine 
hundred and twenty dollars; do you mean the reserve ? 

Q. I mean the net reinsurance amount? A. Well, about 
$3,800,000. 

Q. How is that invested; have you it invested in bonds and mort¬ 
gages ? 

Mr. Moak —He has given all that. 


119 


Q. In arriving at this, have you given it from memory or did you 
take it from the books so that you know ? A. I gave it from mem¬ 
ory ; I did not have a statement. 

Q. Do you take the statement as to the amount you had paid out 
to agents, attorneys, and for salaries as given here from the books 
yourself, personally ? A. No, sir. 

Q. Of your personal knowledge you don’t know any thing in rela¬ 
tion to that, only as it is handed to you by other persons in the office? 
A. By our bookkeeper; T asked him to make it out. 

Q. It ou asked him to make it up, and you gave it as he made it 
up. A. Yes, sir. 

By Mr. Moak : 

Q. Have you reinsured any risks during the past live years? A. 
Yes, sir. 

Q. To what extent ? A. Well, the company, some years ago, 
decided to take risks to the amount of $20,000 ; in order to encourage 
the agents we would write $20,000, but in very few instances would 
we carry it; we would reinsure one-half. 

Q. ITow much is the aggregate of the reinsurance? A. It is very 
small; we wrote very few $20,000 insurances; about live out of six 
we reinsured. 

Q. How much in amount have you got reinsured, as near as you 
can get it ? A. About $150,000. 

Q. In what company? A. Scattered all around New York. 

Q. In* different companies ? A. Yes, sir. 

Q. What rate did you pay, as compared with the rates you re¬ 
ceived ? A. A little less; the rule calls us to pay fifteen per cent, 
and five per cent on renewals. 

Q. In other words, if the premium was a $100, you would pay 
from eighty to eighty-five? A. Eighty-five. * 

Q. Then you would lose money because you pay your agents 
thirty-five per cent? A. We lose money; yes. 

Q. By that policy you would lose twenty per cent the first year? 
A. Yes; that is the estimate among companies to allow from fifteen 
to twenty per cent. 

Q. Then if you have $150,000 that you have taken and reinsured, 
you have lost $30,000 hi the operation ? A. One^hundred and fifty 
thousand dollars in insurance, not in cash value. 

Q. How much would be the premium on $150,000 ? A. I should 
say about five per cent; six or seven thousand dollars. 

Q. Is that all the reinsurances you have ? A. Yes. 

Q. Have you reinsured any other companies ? A. Yes, sir. 

Q. To what extent ? A. The Merchant’s Life of New York 
State. 

Q. To what amount ? A. About $100,000. 

Q. At one time? A. The whole company. 

Q. Is that all the policies they had ? A. Yes; that is the whole 
amount. 

Q. What amount did you have? A. They paid our four and a 
half per cent reserve. 


120 


Q. 1 understood you to say that you had paid no person any tiling, 
directly or indirectly, any sum of money for procuring, or as an 
inducement to procure, the surrender or cancellation of any policy ? 
A. Not a penny; we have written a good many letters to induce 
parties not to surrender their policies; it is prejudicial to the com¬ 
pany. 

Q. In those cases of reinsurance, where you reinsure a company, 
did any of your officers receive any thing for that ? A. No, sir ; 
not a penny. 

By Mr. Moody : 

Q. You simply took the examination if (as) the other company 
had taken it ? A. Yes, sir. 

1 Q. You did not re-examine yourselves? A. No, sir. 

By Mr. Moak : 

Q. Suppose you state your method of reinsuring—take this com¬ 
pany you have mentioned—and give us a history of that transac¬ 
tion ? A. The Merchants’ Life Insurance Company was the name 
for (of) it, of New York city; that company went into the hands of 
a receiver. 

Q. About when? A. In 1874; we understood that the receiver 
desired to reinsure that company. 

Q. How did you understand it ? A. General gossip on the street. 

Q. Your company understood it from general gossip on the street ? 
A. Every one knew it in New York. 

Q. That they wanted to reinsure ? A. That the receiver wanted 
to reinsure it. 

Q. Was the announcement brought officially home to your com¬ 
pany? A. No, sir; our company heard that the Merchants’ had 
gone into the hands of a receiver, and that they desired to reinsure 
the risk; I went down to see Mr. Alexander, the receiver; says I, 
“ are you the receiver of the Merchants’ ?” he said he was; I said, 
“do you desire to reinsure this company with the Globe?” says he, 
“yes;” says I, “on what terms, how much will you pay us?” says 
he, “ I will pay four and a-lialf per cent;” says I, “ I will have to 
bring the thing before the finance committee, and we shall have to 
know the character of the risk;” he gave ’em ( me ) a memorandum 
of the risk ; I had the doctor look around ; we looked into the mor¬ 
tality of the company, found it was fair, submitted it to the finance 
committee, and accepted the proposition at four and a-half per cent. 

Q. Idas your company, on any occasion, loaned any money or 
securities to any other insurance company ? A. No, sir. 

Q. Not a dollar? A. No, sir. 

Q. Has your company, on any occasion, borrowed any monej’ or 
securities from any other company ? A. No, sir. 

By Mr. Weiant: 

Q. \ ou submitted that to your finance committee alone ? A. 
Yes, sir; and when they approved of it they called the full board. 


121 


Q. Full board of directors ? A. Yes, sir. 

Q. Action was taken in th<3 board of directors ? A. Yes, sir. 

Q. Was there any written contract for the arrangement (to rein¬ 
sure )? A. Yes, sir. 

Q. Made directly with the receiver? A. Yes, sir; and we sent 
it up to the superintendent of the insurance company, and it was 
tiled. 

Q. Were the policyholders consulted in the arrangemeut? A. 
No, sir. 

Q. It was done without their consent ? A. Yes, they had nothing 
to be consulted about. 

Q. Have you the contract with you ? A. No, sir; it is published 
in the superintendent’s report; there was no hardship brought on 
the parties; the company had gone into the hands of a receiver by 
order of the court, in the first place; in the second place, the re¬ 
ceiver reinsured those risks with us and submitted it to the court, 
which approved of it; in the third place, we will say you were in 
the Merchants' which went into our hands; I am the secretary of 
the Globe, and we send you a notice to this effect: Dear sir, you 
have a policy in the Merchant’s; the policy has been reinsured in 
the Globe; do you desire to transfer yourself to the Globe or re¬ 
main in the Merchants’; you have your choice; if you come into 
the Globe you fare exactly as the Globe policyholders do; if you do 
not you pay your premium and fare exactly as the Globe policies 
do, only you get no dividend; therefore the large majority of them 
came into the Globe. 

By the Chairman : 

Q. Then the understanding in taking this business in hand is, it is 
in the nature of a new business you desire which you consider prof¬ 
itable to the company? A. Yes, sir ; you know in reinsurance mat¬ 
ters there has been a great deal of talk about it, and it has been sup¬ 
posed that reinsurance has been abused; I don’t think we ever heard 
a complaint from a single member of the Merchants’ Insurance Com¬ 
pany, either by complaints to the department or from any one, as to 
how they have been treated by us; this state of things I consider 
very flattering to the company. 

Q. Is it generally profitable to the insurance company ? A. We 
come out just about even. 

Q. Do you approve of it, as an insurance man ? A. Yes, sir; I do 
approve of reinsurance where the risks are a fair average. 

By Mr. Lang. 

Q. Why, wherein is the gain to the insured or to the company ? 
A. It increases the volume of the business of the company, that 
is all. 

Q. Well, what does it benefit the company; if it adds to the ac¬ 
cumulated wealth of either company it comes out of some one; 
where does it come from ? A. The more wealth a company has the 
stronger it is; it is better for a company to have ten millions than 
five, and five than two and a half. 


122 


Q. When you assume ( reinsure you assume) a $20,000 risk, and 
you reinsure a part of that in another company, do you mean that 
company aids you in carrying the risk ? A. In the case of the 
Merchants’ they did not have any risk above $5,000 ; the large bulk 
of them was $2,000; it was a small company with a low risk. 

Q. The principle is the same, whether it is $5,000 or $10,000 ; 
you take a $20,000 risk and go to another company and ask to them 
to help you carry half of it? A. Yes. 

Q. Then you say to the insured you may do as you please, you let 
us transfer some of that $10,000 ? A. We don’t consult the as¬ 
sured at all. 

Q. The reinsurance runs to you in case of death ? A. No ; we 
will suppose you are insured with us for $20,000, and we reinsure 
you in the Mutual Life for $10,000, and you die—- 

Q. When you reinsure me it is before I die ? A. Yes. 

Q. What kind of a contract is that between you and the Mutual 
Life ; what kind of a bargain is it ? A. We put you in the Mutual 
Life for $10,000 and pay the premium. 

Q. In other words, you take a policy on my life running to your 
company and payble at my death to your company ? A. Yes, sir. 

O. That is the contract between you and the Mutual Life ? A. 
Yes, sir. 

Q. Upon my life ? A. Yes, sir 

Q. There is a contract between you and me for $20,000 ? A. 
Yes, sir. 

Q. You make yourself secure in the means to pay the $20,000 by 
taking a $10,000 policy in the Mutual Life? Q. Tes, we divide the 
risk ; suppose you die— 

Q. Well if I die, what do you mean by transferring the risk ; you 
propose to transfer the risk and say I may be carried by the Mutual 
Life, and the contract shall be canceled in regard to half of it ? 

Mr. Moak —That is in cases where companies expire ? 

Q. Where your company is going to reinsure me you would not 
say any thing to me about it? A. No; where does it concern you ? 
it is a matter for the company. 

Q. Well, it would concern me a good deal; you might swap off a 
large amount of your policies, and the company you swap off to 
would be good for nothing, and you and I would be good for 
nothing. 


By the Chairman : 

Q. It is the same as fire company ; a fire company would take a 
risk of $20,000; it is more than they want to carry; they pass over 
$10,000 and keep $10,000 ; in return the neighboring company is 
bound to give them a policy; so they help each other, is that'it? 
A. Yes, sir. 

By Mr. Moody : 

Q. When did you reinsure the Merchants’ ? A. I think in 1874, 




123 


Q. How much did you receive from the company for reinsuring 
them { A. Four and a half per cent reserve. 

Q. Yon take the basis of the American experience table? A. Yes, 
four and a half per cent. 

Q. They paid you simply that? A. Yes, sir. 

Q. Did you employ any one to secure it for you ? A. Ho. 

Q. Did you pay any attorney? A. Ho. 

Q. You paid no person ? A. Ho. 

Q. Or company any thing ? A. Hot a cent; the contract is all 
down here in the department; I sent it to the department, and it is 
in the 1875 report. 

Q. Did the receiver give the money in his hands over to you to 
pay it ' A. He did not have any; all the money was here in 
Albany. 

Q. And you did not get it ? A. Ho ; it is there yet, to the credit 
of the Merchants’ Life. 

Q. It is there yet? A. Yes, sir. 

Q. You did not take any thing of the Merchants’ ? A. Ho, sir. 

Q. How hiucli was it ? A. I think it was $100,000; it is the 
reserve. 

Q. What was the amount of the policies ? A. I think it was 
$2,000,000 or $1,800,000. 


By Mr. Lang : 

Q. Do you think that a provision can safely be made by legislation 
to provide against the lapsing of policies, that is, to the end that if 
the company was disposed to be dishonorable to the insurer the law 
could interpose and prevent the forfeiture of a policy ; do you think 
a provision of law could be made which shall prevent a company 
taking advantage of the mere technical lapse of time by which the 
insurer is deprived of all benefits of what he has paid ? A. I don’t 
think any honest company would take advantage of it. 

Q. You don’t answer what I ask you; it is insisted by some no 
law can be passed that is practicable; that it must be left to the 
company; your predecessors has testified that there is no legal lia¬ 
bility on the part of the company, even if a man has paid his pre¬ 
mium twenty times ; if he lets it run over by the terms of the policy 
it lapses, and there is no legal liability on the part of the company, 
but as a matter of keeping their reputation up they will revive it and 
do a large number of good things; they base it on the idea that they 
are good men, and will do good for the insured; yet the insured tind 
fault ; what I wjmt to know is, can we legislate against the lapsing 
of a policy in such a way as to prevent the forfeiture of the money 
paid, and compel the company to give back to the man a paid-up 
policy for such an amount that (as) he has paid ? A. A policy is 
written in favor of a man, and that man don’t pay his premium; 
the company has got to know some time or other when that policy 
has fully lapsed in order to determine its own liabilities or debts, in 
order to know how much surplus it has got, and in order to know 
how much dividend it can pay. 


124 


Q. Why not have it never lapse in the sense of its being entirely 
worthless; why not, for the time he has paid, give him a paid-up 
policy for his reserve, what his reserve is worth; for he has paid 
more in proportion during the first three or four years ? A. The 
difficulty would be in that case the company would be charging 
against themselves year after year money, four-fifths of which would 
never be called for; yes, nine-tenths would never be called for. 

Q. Then there is no objection for having the law step in and say 
they shall not forfeit a policy ? A. I think it would be better, in¬ 
stead of having a dead fund there to allow the company to distri¬ 
bute it. 

Q. How do you do with it now; hold it at a dead fund ? A. Ho, 
sir. 

Q. Do you distribute it ? A. After a time we treat it as actually 
lapsed, and it belongs to the balance of the insured; then we strike 
a balance, take all our reserve, liabilities and assets, and find out how 
much we own more than we owe, and divide that in dividends. 

Q. To stockholders ? A. Ho, to policyholders. 

Q. But the stockholders get dividends? A. Yes; seven per cent 
a year. 

Q. It ha§ been said the vice-president of one company was nomi¬ 
nally the general agent of another company, but the actual general 
agent was another man, who was actual agent of his company; one 
was in Hew York and the other in Boston, and this vice-president 
who was the nominal general agent, drew an annual commission of 
$10,000 or $12,000, and paid another man $2,000 to do the work, 
who is the acting agent, but whose name is not known; that state 
of affairs has presented itself; can you conceive that great frauds 
might be perpetrated by officers of one company helping another ? 
A. Yes, sir; but I don’t think there is any fraud perpetrated in that 
case. 

Q. Do you loan any money on real estate ? A. Yes, sir. 

Q. It is claimed that there is a great opportunity of fraud and 
connivance between companies growing out of this state of facts; a 
party wants to procure a loan ; the life company to whom he applies 
says ours is a city company; we will let you have the money, but 
shall insist, before we do, that you shall insure the buildings in a 
certain fire company, as we have great confidence in that company ; 
as a result the risks are put in the fire company designated by the 
lender, which is the life insurance company ; can you see any chance 
for fraud growing out of that ? A. We do that. 

Q. You do it? A. Yes. 

Q. Can you see that any wrong can grow out of it? A. Ask me 
how we do it, and I will give you in twenty or twenty-five sentences 
my idea and perhaps you can get what you want. 

Q. I am asking what your judgment is? A. For a great many 
years, and for one or two years after I was secretary, before a bond 
and mortgage was effected we sent the party to a fire insurance com¬ 
pany; sometimes he will assent to it and sometimes not; sometimes 
he would pay the premium and sometimes not; we had a great deal 


125 


of trouble because we were very anxious to own as much lire insu¬ 
rance as the face of a loan; finally, in order to protect ourselves, 
we made a rule that we would elect ourselves, where we carried the 
risk, to place the tire insurance, agreeing beforehand, of course, that 
we would see it is carried at as low rate as possible; we have one 
man now in the employ of the company who places all the lire in¬ 
surance of the company. 


By the Chairman : 

Q. Is that customary with life companies generally ? A. I think 
it is; if you had asked me that live or six years ago, I should say no. 

By Mr. Wei ant : 

Q. Is this officer paid by your company ? A. Yes, he gets a reg¬ 
ular salary from us. 

Q. And gets a per centage besides ? A. He gets ten per cent from 
the lire insurance company. 

Q In addition to his salary ? A. Yes. 

Q. Don't any of the rest of the officers get any part of it ' A. 
Not a penny. 

Q. Don’t you ? A. No, sir. 

Q. Nor any of the officers ? A. No, sir; I should think it was 
a scandal to do so. 

Q. What is his salary in your company ? A. I think he gets 
$1,000 a year, and this commission brings it up to $1,200 or $1,800 


By Mr. Moak : 

Q. Who is he ? A. A clerk named Wright. 

Q. Is he related to any of the officers? A. No, sir. 

Q. Can you see that frauds can be perpetrated on either life or lire 
insurance companies by that state of‘things? A. Yes; Mr. Wright 
might charge me or the borrower twice two much money; 
the fire insurance company might charge him the regular rate and he 
might pocket the difference ; it can be done every time. 

Q. Does it take place ? A. I don’t know that it does, and I should 
say not : according to the general tendency of American people, if 
they were charged too high they would complain to us; I think, as 
a matter of fact, we get lower rates. 

Q. Have you any particular fire insurance companies in which you 
insure ? A. In the Continental Company and the Home Company of 
New York, the Liverpool, London and Globe of England, and the 
Lancashire of England ; these four companies the bulk of the business 
is in. 


By Mr. Lang : 

Q. If an officer of a life company were an officer of a fire com¬ 
pany, or interested in it, and knew its financial standing, would they 
not have the power to swap the liability from one to the other, and 
help one company to ruin the other ? A. No. 


126 


Q. Suppose the fire company was irresponsible in fact ? A. Well, 
suppose it was, liow could it be done ? 

Q. The premium for the loss is paid into the hands of the company 
about the bankrupt ? A. Well, [there is no loss except in case of 
fire. 

Q. But in case of carrying the insurance along the company would 
get the premium ? A. Yes ; they would get the yearly premium. 

Q. In case of loss, they would not pay any thing? A. Well, it 
would be a mere bagatelle; they could not jeopard a fire company 
or a life company. 

Q. How is that? A. The property would be secure enough, with 
the building down; but we will assume it will be a dead loss, and 
they take the land. 

Q. Then, how is the company going to get the bond and mort¬ 
gage paid ? A. We have got the land. 

Q. Assume it is not worth it ? A. Well, assume it is not worth 
a penny; they lose nothing ; take any company, the loans don’t 
average any more than $15,000 on a house and lot; take our com¬ 
pany, and take an extreme case— 

Q. But suppose they are all insured in one fire insurance company ? 
A. Yes; and suppose it fails to-morrow; we take these loans and 
place them in another company; the property is not going to burn 
up to-morrow, all of it; as a matter of fact, since 1864 we have only 
had three fire losses. 


Isaac Lloyd sworn : 

Examined by Mr. Moak : 

Q. It has been here stated that Mr. William M. Evarts was under 
a standing retainer by your company; do you know any thing of it? 
A. No, sir; T do not. 

Q. Have you ever heard any thing of it? A. No, sir; never. 

Q. You are the secretary of the company ? A. Yes, sir. 

Q. How long have you been secretary ? A. One year. 

Q. Who was secretary previous to your taking it ? A. John M. 
Stewart- 

Q. Where is he now ? A. He was made second vice-president a 
year ago, but died this year. 

Q. How long was he secretary ? A. About nine years. 

Q. Do you sign all the checks or drafts of the company upon the 
banks? A. Yes, sir. 

Q. All of them ? A. In my absence the assistant secretary signs. 

Q. When present do you sign them? A. Yes, sir. 

Q. Have you signed any payable to William M. Evarts? A. I 
have never signed any check payable to Mr. Evart’s order. 

Q. Or that you understood was to go to Mr. Evarts? A. Never 
at any time; I never heard his name mentioned in the company as 
retained by the company. 

Q. Now, when did Mr. Winston, the president, leave the State ? 
A. I cannot give you the exact date; but I think about a month ago. 



127 




Q. Give us as nearly as you can ? A. I don't know, but it is on 
the paper you have. 

Q. He has sworn to this paper, I see, on the twenty-first of Feb¬ 
ruary ; do you know the day this paper was sworn to. Q. (A). I 
cannot remember the time. 

Q. Do you know any thing of it; who drew it; whose handwrit¬ 
ing is it in ( A. In the handwriting of one of the copyists of the 
office. 

Q. Do you know who drew the paper ? A. I do not. 

Q. Where is Mr. Winston ? A. When last heard from, about ten 
days ago, he was in the city of San Francisco. 

Q. Did he go from New York directly to San Francisco? A. He 
went from New York directly to Chicago, where he remained one 
day, and from there directly to ^an Francisco. 

Q. Has he remained there ever since ? A. I think when last heard 
from, a week or ten days ago, he stated he was going to some point, 
but did not state where. 

Q. At what place ? A. I did not see the letter, sir. 

Q. You cannot state where he was going? A. I cannot state. 

Q. And who is the first vice-president of the company ? A. Rich- 
ard A. McCurdy. 

Q. Who is the second? A. Richard A. Grannis. 

Q. How long has Mr. McCurdy been first vice president ? A. I 
should say about ten years. 

Q. How long has Mr. Grannis been second vice-president ? A. 
About two months. 

Q. How long has Mr. Stewart been secretary ? A. About nine or 
ten years. 

Q. Is Mr. McCurdy present regularly, or absent from the office 
of the company at any regular season of the year, if so, give the 
time ? A. He generally goes away in the summer season for a month 
or more. 

Q. About what time ? A. About July or August. 

Q. Does Mr. Winston go away from the office at any time of the 
year ? A. It has been customary with Mr. Winston for about five 
years to spend two months away from the city of New York. 

Q. Where does he go usually? A. He has been to California 
twice ; he has been to Europe once, and once he made a tour through 
the South. 

Q. He was absent during the Miller examination; where was he 
then? A. I think he was in New York at the time of the examina¬ 
tion of the company. 

Q. During the legislative examination, was he not absent at that 
time ? A. I have no recollection about it. 

Q. You have no recollection where he was ? A. I have not. 

Q. How long after this paper was sworn to was it that he left for 
San Francisco ? A. I do not know sir; I did not see the paper until 
Professor Bartlett had it yesterday. 

Q. Well, you should say he had been gone how long ? A. I should 
say about a month, or it may be only three weeks. 


128 


Q. When is he expected to return ? A. In May; that was his 
intention when he left. 

Q. And he will not return to the State until that time ? A. That 
was his expectation. 

Q. Do you know whether Mr. Winston holds any other office in 
any other company of any kind in New York ? A. I know he does 
not. 

Q. I am not speaking of insurance companies in particular, but of 
any character? A. He holds no office of any kind to my knowledge. 

Q. In any banking institution ? A. In no banking institution. 

Q. How is it with Mr. McCurdy ; is Mr. McCurdy the same ? A. 
Mr. McCurdy is vice-president of the American Bible Society, but 
is officer in no moneyed corporation. 

Q. As to your second vice-president; does he hold any office of 
any kind in any moneyed corporation or business corporation of any 
description ? A. No, sir. 

Q. Or business association, whether incorporated or not? A. No, 
sir. 

Q. And you are the secretary ; do you hold any other office ? A. 
I do not. 

Q. Or the assistant secretary ? A. No, sir. 

Q. Who is your regular solicitor in New York? A. Oliver H. 
Palmer. 

Q. Do you know how much he is paid a year, his regular salary ? 
A. His regular salary, I think, is $14,400. 

Q. Don’t you employ counsel beside him? A. Yes, sir; there is 
counsel employed at times. 

Q. Well, who is that; who is usually employed; who is the 
stated counsel of the company? A. Judge Davies is one of the 
counsel of the company. 

Q. There don’t seem to be any thing allowed as paid to him 
during the year; is (if) this $14,400 the amount of ( includes ) the 
salary paid to the solicitor? A. Judge Palmer is a paid officer of 
the company, is employed in the company, (has a bureau in the 
company ,) and is head of the law bureau. 

Q. His salary is about $14,000 ? A. He is paid a stated sum the 
. same as any other officer. 

Q. I don’t understand why there is no statement of any money 
paid to Judge Davies or any other counsel, except Mr. Palmer. 

By the Chairman : 

Q. I would ask if the payment to Judge Davies and Mr. Betts is 
not for the examination of titles, and that they are paid by parties 
getting loans ? A. It was so formerly, but for the past two years all 
the work is done in the office; there is a bureau of law in the office, 
and Judge Palmer is the head of it; the searches are made by clerks 
in the bureau of law, and without expense to the borrower; the ex¬ 
pense is entirely paid by the company. 

Q. The expense of searches? A. Yes, sir. 


129 


By Mr. Wei ant: 

Q. That is the general way in the Mutual Life Company? A. It 
is strictly so in the Mutual Life Company. 

Q. On city property, I suppose? A. Of course, on New York 
city property. 

By Mr. Moak : 

Q. Well, that does not answer the question I put; how is Judge 
Davies paid ? A. Well, Judge Davies renders a bill whenever he 
performs any service for the company, and it is acted on by the 
committee on expenditures, who meet once a week, which committee 
is composed of three trustees; they approve or disapprove of the 
bill, and if approved it goes to the cashier and he draws a check. 

Q. AVhere does that appear on the statement here ? A. It comes 
in under the head of general expenditure^; this resolution simply 
called for the salaries; Judge Davies has no salary; if you had re¬ 
quired the other we would have given it. 

Mr. Moak. —The resolution calls for the amounts paid in salaries, 
fees, compensation or donation to the respective presidents, vice- 
presidents, secretaries, attorneys, counsel, and all other employes; 
that seems like a mere dodge to evade giving the information. 

Q. You have seen this statement ? A. I saw it yesterday. 

Q. Does the amount paid to Judge Davies, as counsel for the com¬ 
pany, appear anywhere in the statement? A. Will you allow me to 
look over it ? 

Q. Certainly, and then state if you can find it ? A. Yes, sir, it 
appears here in the last clause; the amounts paid to attorneys and 
counsel residing in different parts of the country was $17,715. 

Q. I understood the actuary to say that included the amounts paid 
to attorneys outside the city of New York, and the words “residing 
in different parts of the State,” would seem to imply that; I don’t 
understand that to include any amount paid any attorney or counsel 
in the city of New York, do you ? A. I suppose it includes all, with 
the exception of the solicitor. 

Q. Do you know ? A. I do not. 

Q. Have you ever made an investigation for the purpose of de¬ 
termining ? A. I have not. 

Q. What other counsel has the company had, except Judge Davies, 
for the year 1876; I am speaking of counsel as distinguished from 
Mr. Palmer, the solicitor ? A. I do not remember any in the city 
of New York. 

Q. Do you not remember any ? A. No, sir. 

Q. Have you any means of ascertaining here whether there was 
or not ? A. No, sir. 

Q. Was Judge Davies paid any money during the past year? A. 
I think he was paid some, but what the time or amount was I have 
no means of determining here. 

Q. Will you make a memorandum of that and ascertain whether 
the amounts paid counsel in New ^ ork is included in this $17,715, 
and, if not, ascertain what was paid them ? A 1 es, sir. 

9 


130 


By the Chairman : 

Q: Who, in your company, would know all those general points 
affecting all the business? A. I think the vice-president would know 
best about the general managem ent of the business, but possibly 
those facts he could not give u nless they were taken from the books 
of the company. 

By Mr. W eiant : 

Q. Who has personal knowledge of the items ? A. The auditor 
or bookkeeper who keeps the books. 

Q. What are their names? A. William J. Easton is the auditor’s 
name ; the bookkeeper is Mr. J. C. Perrin. 

By Mr. Lang : 

Q. Would they know tlie items that the finance committee would 
know ? A. W ell, their duties are so large that they might not 
know. 


By Mr. Wei ant : 

Q. Do you know whether any other attorneys or counsel in New 
York city have been employed by the company during the past year < 
A. No, sir; I do not. 

Q. Have you information that other persons have been employed ? 
A. No, sir ; I have not. 

Q. None whatever? A. No, sir. 

Q. What officer of the company could afford that information? 
A. Well, the executive officers could afford the information. 

Q. Who are they ? A. The vice-president, I suppose. 

Q. Mr. McCurdy ? A. Yes; the president being away, he is the 
proper person. 

Q. Who employs them ? A. They are generally employed by the 
executive officers and the finance committee. 

Q. Who are they ; give their names? A. Frederick S. Winston, 
Pickard A. McCurdy. 

Q. Are those the only two? A. The president and vice-president. 

Q. Who is the second vice-president ? A. He is not an executive 
officer; he is assistant to the executive officers. 

Q. I want to know the names of the officers who can afford the 
information ? A. Those are the only two. 

Q, Give the names of the finance committee, if you please ? A, 
The finance committee is Picliard H. McCurdv, Samuel D Bab- 
cock, Seymour L. Iiusted, IB W. Smith, John H. Sherwood, F. H. 
Cossett. 

Q. Who is H. W. Smith ? A. He is a produce merchant in South 
street. 

Q. Can you give the n ames of the attorneys employed outside of 
New York ? A. I could not. 

Q. Have you no information? A. I have not. 

Q. Who is Seymour L. Husted ? Q. He is a resident of Brooklyn. 


131 


By the Chairman : 

'Q. 1 understand a company like this, in view of the magnitude of 
its business, has to have special departments? A. Yes, sir. 

By Mr. W eiant : 

Q. What are the duties pertaining to your office ? A. I have the 
general supervision of the lower office of the company, also the cor¬ 
respondence, the payment and signing of all checks after the bills 
properly audited by the committee on expenditures, the supervision 
of all demands {payments) and claims by death, after they have 
been passed upon by the committee on mortuary claims, also three 
trustees, and the general supervision of the correspondence of the 
company. 

Q. You say you sign checks; have you signed checks for any at¬ 
torney except Mr. Davies during the past year? A. Yes, I think I 
might have done so, but I have no recollection. 

Q. You have no recollection of signing a check for a single attor¬ 
ney except Mr. Davies, or a lirm of attorneys? A. Judge Palmer’s 

Q. I mean outside of that ? A. I have no recollection, but I 
think, undoubtedly I have. 

Q. Don’t you recollect that you have signed checks ? A. I think 
I have. 

Q. Will you give the names ? A. I cannot recollect them, but will 
furnish the information. 

Q. Can’t you give the name of a single firm? A. I cannot; I 
will give you the information from the books of the company when 
I return. 

Q. Have you not had correspondence with the attorneys on behalf 
of the company ? A. No, sir; it is carried on in the law bureau; 
correspondence with reference to law matters is carried on by the 
solicitor. 

Q. Did you ever hear of such an organization as the Chamber of 
Life Insurance? A. Yes, sir; I have. 

Q. Where is it located? A. It is located at the city.of New 
York. 

Q. Are any of the officers of your company members of the or¬ 
ganization ? A. I think that the vice-president is a member of the 
organization. 

Q. Mr. McCurdy? A. Yes, sir. 

Q. Are any of the other officers members of the organization ? 
A. Not that know of. 

Q. How is it made up, do you know ? A. I do not. 

Q. In other words, you don’t know any thing about the manage¬ 
ment of the concern ? A. I do not. 

Q. Nor anything about what its objects are? A. I do not. 

Q. Have you ever had any correspondence with that association ? 
A. None whatever. 

Q. Do you know who is at the head of the organization ? A. I 
think it has a board of officers like other corporations. 



132 


Q. Has it a president ? A. I am not positive; I have not seen a 
list of the officers in some time. 

Q. Can yon give the names of any members of the organization, 
except Mr. McCurdy ? A. I know Charlton T. Lewis is the 
secretary. 

Q. Is he connected with any life insurance company, and if so, 
what one ? A. Not any to my knowledge. 

Q. Can you mention any other person connected with it ? A. The 
Chamber of Life Insurance ? 

Q. Yes? A. There are half a dozen of the co mpanies that belong 
to it. 

Q. Any of the officers that you can mention, persons connected 
with it ? A. No, sir. 

Q. You cannot mention any other? A. No, sir. 

By the Chairman : 

Q. Does it bear the same relation to the insurance companies that 
the clearing-house does to the banks ? A. I could not state that. 

Q. Have you drawn any checks for any action of that organiza¬ 
tion, to your knowledge ? A. Not to my knowledge. 

Q. Payable to the order of any of the officers of that organiza¬ 
tion ? A. Not to my knowledge. 

By Mr. Moody : 

Q. You have only been secretary one year ? A. I have been 
secretary one year. 

Q. What w r as your connection with the company previous ? A. 
Previous to that I was auditor for five years; six years, I think, and 
previous to that I was book-keeper; I have been in the company 
about twelve years. 

Q. During what years were you auditor ? A. I think from 1870 
to 1875. 

By Mr. Wei ant : 

Q. What are the duties pertaining to that position ? A. The 
auditor is the head of the bureau of accounts; he is supposed to 
have the oversight of every thing that pertains to the book-keeping 
of the organization. 

Q. Lou pass all the accounts? A. Yes, sir ; the auditor passes all 
the accounts. 

Q. You examine them to see whether tliev are correct ? A. Yes, 
sir. 

Q. Are they adjusted by the auditor alone? A. By the book¬ 
keeper first and then afterwards by the auditor. 

Q. Don’t they go before any other part of the company for 
adjustment ? A. The agents’ accounts do you mean ? 

Q. What accounts did you audit, as auditor? A. Well, the audit¬ 
or audits the accounts from the different agents of the company. 

Q. To see that their commissions and accounts are kept accu¬ 
rately? A. Yes, sir. 


133 


Q. \ on don’t have the adjusting of bills presented to the company 
for services ? A. Not at all. 

Q. A ou don’t adjust those bills, such as attorneys’ fees ? A. Oh, 
no ; that is not the province of the auditor at all. 

Q. How are those fees adjusted ? A. By a board composed of 
members of the company; what fees do you mean ? 

Q. Take attorneys’ fees ?, A. No, bills of that sort would go 
before the committee on expenditures for their approval. 

Q. Who compose the present committee on expenditures ? A. 
William M. Vermilyea, J. C. Holder and Seymour L. Husted. 

Q. Does that book you have in your hand contain all the officers 
of the company ? A. It contains all the names of the trustees; the 
report we had here yesterday contains all the officers of the com¬ 
pany ; that was the only copy that was brought up, and I was anxious 
to have it here for my own assistance. 

Bv Mr. Moody : 

Q, Professor Bartlett is the actuary of the company ? A. Yes, sir. 

Q. And has been connected with the company how long ? A. I 
think about six years. 

Q. He has an assistant with him ? A. There are two assistant 
actuaries. 

By Mr. Lang : 

Q. Does this board of trustees draw salaries ? A. No; no salaries. 

Q. I don’t mean as such; your president has a salary ? A. Yes, 
there is the president, to be sure ; he draws a salary. 

By Mr. Moody : 

Q. How are the officers elected ? A. By the board of trustees. 

Q. How are the board of trustees elected ? A. There are nine 
elected each year; on the first of June each year. 

Q. By whom ? A. The trustees are elected by the policyholders ; 
it is a mutual company. 

Q. Are the policyholders generally represented at that election ? 
A. The polls are open, sir, and a good many who reside in the city 
of New York attend each year and vote. 

Q. Do persons hold proxies that vote at these elections ? A. I 
have no knowledge of that. 

By Mr. Lang : 

Q. Are they permitted to vote that way, by proxy ? A. I believe 
they are; I think there are two or three hundred who come to the 
office of the company and vote. 

By Mr. Weiant : 

Q. How many policyholders have you in the city ? A. I could 
not state. 

Q. How many have you altogether ? A. I think 91,000. 

Q. How many attend to vote ? A. Personally, not to exceed 200 
in the many years I have been there. 


134 


Q. The others who vote do it by proxy ? Yes, unless they choose 
to attend. 

Q. How many trustees have you ? A. There are thirty-six ; four 
groups of nine each. 

By Mr. Lang : 

Q. What notice is given of the annual meeting ? A. It is pub¬ 
lished in two or three of the Hew York papers for two or three 
weeks. 

Q. Ho notice by mail ? A. Oh, no, 

By Mr. W eiant : 

Q. Do your officers hold policies on their own lives ? A. The 
president is insured, the vice-president and myself are also insured 
to my personal knowledge. 

Q. How much has the president? A. I don’t know ; I think the 
president holds $20,000 on his own life. 

Q. And the vice-president ? A. I don’t know how much. 

Q. You hold a policy ? A. I have a policy of $6,000. 

Q. Are the other officers insured, any of them ? A. I really 
could not state ; I think likely they have so, every one of them. 

By Mr. Moak : 

Q. Does this company loan to policyholders? A. Hot at all; no, 

sir. 


By Mr. Lang : 

Q. What are the functions of the board of trustees; what do they 
do beside elect the officers ? A. There is a monthly meeting of the 
trustees—one occurs to-day—and, in addition to that, the trustees 
are divided up into different committees; there is a committee on 
finance, on insurance, on mortuary claims and on expenditures. 

Q. I understood you to say that none of the trustees receive any 
salary ? A. Ho, sir; but when they meet in committee they receive 
five dollars in gold for each meeting in session ; the finance com¬ 
mittee meets once a week, the mortuary claims committee once a 
week, and the committee on expenditures once a week. 

Q. Do you know whether they draw pay for meetings when they 
are actually present, or for each committee ? A. Only when they 
are present. 

Q. There is such a thing as “ constructive ” sitting, and I did not 
know whether it applied to them? A. Ho, they only receive for 
those committees when present. 

By the Chaieman : 

Q. In most of the banks the trustees receive five dollars when 
they attend a meeting; if they are present at the roll call the secre¬ 
tary passes round and gives each member his five dollars in gold, 


135 


and if they are not present at that time they don’t get it, no matter 
if they only came in a few minutes afterward; I suppose the same 
course, in a measure, is adopted with your trustees? A. Yes, sir. 

By Mr. Lang : 

Q. I see the Governor is a member of the board of trustees; lie 
ought not to draw pay, and I don't know whether he does or not ? 
A. No, sir; Governor Robinson has been for a good many years one 
of our trustees. 

By Mr. Moak : 

Q. I see you have the market value of bonds over cost as 
$844,801 ; how does that compare with this year? A. I could not 
tell you that; the par value of our stocks last year was $12,063,550; 
the market value is $12,673,569.33; that would not give it exactly, 
because some of our stocks cost a little more than par; the par value 
and market value are not identical, although there is not much dif¬ 
ference between them. 

Q. There seems to be a premium, and I want to know if there has 
been a general decrease ? A. It is about $530,000. 

Q. Less than the cost ? A. More than cost, but it is less than it 
was the previous year. 

Q. There has been that depreciation ? A. Yes,sir. 

Q. You say the market value of the real estate over cost is 
$250,000 ? A. I think that was the report of 1875. 

Q. Yes, and I ask how that compares with this year ? A. The 
real estate was placed at its exact cost this year, and there was no 
market value in excess of cost in the report to the department. 

Q. How did you arrive at the market value of the real estate in 
1875 ? A. That was arrived at by the finance committee. 

Q. Did they make an appraisal of the real estate? A. I don’t 
know that, sir. 

Q. You don’t know how they did arrive at it? A. No, I don’t 
know how they arrived at it. 

By Mr. Lang : 

Q, Do any of the board of trustees act in any official capacity ex¬ 
cept as trustees, except the president and vice-president ? A. No, 
sir. 

Q. They receive no per centage sitting as a board ? A. No, ex¬ 
cepting the five dollars they receive when attending on committees. 

By Mr. W eiant : 

Q. Can’t you give us some idea of who prepared the report Mr. 
Bartlett presented ? A. I suppose it was prepared under the direc¬ 
tion of the vice-president. 

by whom ? A. There is a great deal of matter there that 
had to be obtained from the different departments of the office, also 


136 


from the actuary’s department and the book-keeper’s; the vice-presi¬ 
dent had not all the figures, but they had to be got from the differ¬ 
ent books of the company. 

Q. Now, who has charge of that part which relates to attorneys 
and counsel; where would you go to get that information ? A. The 
auditor could state that; all this information is from the general 
books of the company in regard to salaries. 

By the Chairman : 

Q. You stated the vice president would know about that? A. 
Well, not about the actual figures, because those come from the 
books of the company. 

Q. I mean the general condition of affairs ? A. I understood Mr. 
Weiant to ask me who would know about the special items which he 
pointed out. 

Q. If attorney’s fees have been paid to any other than the counsel 
here or solicitor, in what account would that appear? A. In the 
expense account. 

By Mr. Moody : 

Q. Can you tell wliat the amount of the gross surplus on the 
policyholders’account is this year? A. The surplus was $3,568,- 
161.57, that is surplus for division. 

Q. Did you make a division last year? A. Yes, sir; each year 
the surplus is divided among the policyholders. 

Q. Then the surplus that appeared by your account in 1875, of 
$9,452,701, was divided among the policyholders ? A. Let me ex¬ 
plain ; the New York standard is four and one-half per cent; by the 
same value the surplus is $10,262,879.44, at four and one-half per 
cent, and at four per cent those figures I gave you first are correct, 
$3,568,161.57. 

By Mr. Moak : 

Q. At four per cent it is $3,568,161.57, while at four and one-half 
per cent it is $10,262,879.44; I don’t understand that; suppose you 
explain that to me ? A. I could not; it is an actuarial matter which 
I don’t feel able to explain. 

Mr. Lang —It is an insurance arithmetic that we can’t get at. 

Mr. Moak —It must be, for I don’t understand it. 

Witness —Those are the exact figures from the company’s state¬ 
ment and Mr. Smyth’s examination. 

By Mr. Moody : 

Q. Do you hire offices outside of New York for agents ? A. No, 
sir; the company has an office in Philadelphia, and one in Boston ; 
the one in Philadelphia is occupied by agents, a portion of it; the 
one in Boston is not yet finished; with the exception of those the 
company don’t pay any thing for offices. 


137 


Q. You pay no rents? A. No, sir; nor for office furniture. 

Q. The agent simply receives his percentage ? A. Yes, sir. 

Q. Do you furnish offices? A. No, sir; the general agent is ap¬ 
pointed by the company, and he is allowed to select his own office; 
lie hires it, and furnishes it, and pays for it. 

Q. From his commission ? A. Yes; the company allows nothing 
for it. 


By Mr. Moak : 

Q. What are the commissions ? A. The commission paid to the 
agent is thirty per cent the tirst year. 

Q. How much does it amount to last year? A. It depends upon 
the magnitude of their business. 

Q. Well, take it for last year, to the general agent? A. I cannot 
tell that, because I cannot tell exactly what business was done; he 
receives thirty per cent and pays live per cent to the local agents. 

Q. Well, how much does he receive? A. The total amount paid 
by the company last year was $676,967.49 ; we have thirteen or four¬ 
teen general agents, and they appoint their local agents. 

Q. They have each the same power; A. Yes, sir. 

Q. Well, take Merrill, for instance; how much did he receive? 
A. I can’t tell you; this is simply the total. 

Q. That was paid to fourteen general agents? A. Yes. 

Q. And they received how much ? A. Six hundred and seventy- 
six thousand, nine hundred and sixty-seven (676,967) dollars and 
forty-nine (49) cents. 

Q. VV hat proportion of that was paid to the general agent for the 
city of New York, Long Island and Staten Island? A. That would 
be impossible for me to tell without reference to his books and ac¬ 
counts with the company. 

Q. Will you make a memorandum, and ask the vice-president to 
state how much each of those received during 1876 ? A. \ es, sir. 


By Mr. Lang : 

Q. That amount includes all that was paid to the sub-agents ? A. 
Certainly; the general agent gets thirty per cent and six renewals 
at seven and one-half per cent; he pays them five per cent and six 
renewals at five per cent; that is the custom with the general 
agents. 

By Mr. Moak : 

Q. Suppose a man wished to insure and should go to your office; 
he could not be insured unless he went to the general agent ? A. 
Oh, yes, he could, but he would not receive the commission ; a per¬ 
son could go there and make his application and be examined, and 
we could receive it. 

Q. Who receives the commission then ? A. No one ; the com¬ 
pany pays no commission to any one for being insured in the office 
of the company. 


138 


/ 

Q. Can he get it any cheaper by going to the home office ? A, 
That depends upon the arrangement he might make with the agent; 
if he chose to divide his commission with him the company would 
not object. 

Q. Would you charge him as much if he went to the home office ? 
A. The rates are fixed and there is no deviation from them. 

Q. So that the company would get wliat would ordinarily be paid 
to the agent ? A. Yes, sir, the company would save it. 

By Mr. W eiant : 

Q. There is less liability of fraud being perpetrated either upon 
the company or the applicant for the policy, is there not, if the 
business is transacted at the main office of the company than if trans¬ 
acted through the agents or general agents ? A. Well, it would be 
impossible, with the magnitude of the business of the Mutual Life 
Company, to do it. 

Q. I ask whether there would not be less liability of fraud if the 
business was transacted at the home office instead of through agents ? 
A. It is very possible. 

Q. Is it not your opinion, as an insurance man? A. Well, no, I 
can't state that, sir ; I know all these gentlemen. 

Q. You are aware your company interposes defenses on policies 
are yon not ? A. In some cases. 

Q. You interpose the defense of fraud on the part of the policy¬ 
holder in procuring the policy ? A. I think there have been cases 
of the kind; I only know the Mutual Life regards the payment of 
claims as important to their interests. 

Q. Your company has a great many litigated cases? A. Not a 
great many ; no, sir. 

Q. Can you give us an idea of how many there are ? A. I could 
not; no, sir. 

Q. Then how do you know there are not? A. Well, I say but 
few ; I am not competent to testify as to that; the bureau of law 
would be the proper persons; that don’t come under my knowledge. 

Q. You don’t know any thing about litigations and defenses inter¬ 
posed ? A. I do not; I only know of them where checks are drawn 
for compromised claims; to have the business done at the main 
office would require an immense clerical force, and we can only 
transact the business the way we do through general agents. 

Q. Are you able to answer if very many of the litigated cases 
arise from misrepresentation on the part of the local agents, and 
misrepresentation on the part of persons applying for policies ? A. 
I cannot answer that. 


Thursday, March 22. 

The committee met at 3.30 p.m.; present, Mr. Cowdin in the chair, 
Messrs. Weiant, Floyd-Jones, Moody, Husted, Lang and Coulter. 

John A. Nichols, president of the Knickerbocker Life Insurance 
Company, sworn. 

Mr. Johnson— As counsel for the Knickerbocker Life Insurance 



V 


139 * 


OonYpany I would say to the committee that I appeared here the 
other day with a letter from Mr. Nichols, stating why he did not 
comply with the resolution, and send a statement of the affairs of the 
company. He had sent a statement to the Superintendent of the 
Insurance, which contained all the information desired. I would 
further say, that since the president arrived here, he has received a 
dispatch from the secretary of the company, stating that he has been 
called home by sickness in his family, thus leaving the office without 
a secretary, and render it necessary for Mr. Nichols to return home 
as quick as possible. 


Examined by Mr. Moak : 

Q. Are you president of the Knickerbocker Life Insurance Com¬ 
pany ? A. I am. 

Q. Have you a verified or written statement of the various ques¬ 
tions put by the Superintendent of the Insurance Department, or 
have you not prepared any ? A. I have filed a statement with the 
Insurance Department. 

Q. That does not quite answer the question ; this resolution 
requires certain statements to be made as to the way the company 
conducts its business, also as to the salaries paid to its officers ? A. I 
will make that statement under oath. 

Q. You are president of the company, you say ? A. Yes, sir. 

Q. How long have yon been ? A. Since the latter part of October, 

187L 

Q. And previous to that time had you any connection with the 
company ? A. I was vice-president for eighteen months. 

Q. And before that, what, if any thing \ A. I was an agent for 
the company. 

Q. Then you have been connected with the company as vice-pres¬ 
ident and president since 1872 some time \ A. Since the fall of 
1872. 

Q. How many officers of the company were there that received 
salaries last year ? A. The president, secretary and actuary; thoge 
are the officers of the company who received salaries; then I will 
answer further, and say in addition to that, that the counsel and the 
medical examiner received salaries. 

Q. Now, we will take the president first; what was the salary 
received by the president of the company, including per centages, 
and every thing during the last year 1876 ? A. $15,000. 

Q. Was that arrived at as the regular salary, or was part of it a 
regular salary and part of it a per centage ? A. All of it was a 
regular salary. 

Q. For how long had the salary been fixed at the same rate ? A. 
I think the salary of the president has been $15,000—well, ever 
since I have been president; it has been $15,000 ever since I have 
been in the office. 

Q. Has the president of the company received directly or indirectly, 
in any way, shape or manner, from any source, any money from 
the funds or any of the avails, in any shape from (of) the company ? 


* 140 


A. I desire to answer tliat as broadly as the question is put, that I have 
never received a dollar, directly or indirectly, from the company, for 
any purpose or under any circumstances whatever, except the salary, 
as I have before stated. 

Q. Or from the assets of the company ? A. Or from the assets of 
the company, or from any person for or on behalf of the company, 
.save and except only the salary of $15,000. 

Q. Has there ever been any gratuity or addition to the salary 
voted to the president? A. No, sir. 

By Mr. Weiant: 

Q. Have you received any valuable thing whatever as a favor ? 
A. No, sir. {Not a dollar .) 

Q. Have you ever received any favor from the company what¬ 
ever? A. No, sir; I mean to make that statement as broad as pos¬ 
sible ; I have never received any thing but the $15,000 a year. 

By Mr. Moak : 

Q. Now, as to the vice-president ? A. There is none. 

Q. How long is it since you have had one? A. Not since I have 
been president. 

Q. Now, as to the secretary ? A. His salary is $6,000 a year. 

Q. Has he received, since you have been connected with the com¬ 
pany as vice-president or president, any addition or sum, either 
directly or indirectly, for any purpose, or for any services, from the 
assets of the company, other than his regular salary ? A. While I 
was vice-president, I can only answer to the best of my belief; I 
would not answer positively, you know, in regard to that, but I don’t 
think he did during that time; since I have been president, I know 
he never has. 

Q. Not from any source, either directly or indirectly? A. No. 

Q. Or money that was in any way connected with the business of 
the company ? A. Not a cent. 

Q. Then as to the actuary ? A. He gets $5,000 a year. 

. Q. Has that been his regular salary since he was {you were) con¬ 
nected with the company? A. Yes, sir; I think it has; I think his 
salary was raised the year before I went into the presidency; his 
salary was $4,000, and then was raised to $5,000. 

Q. Who has been the secretary of the company ? A. Mr. George 
S. Sniffin has been secretary for fifteen years. 

Q. Do you have an assistant secretary ? A. Not any. 

Q. Your actuary receives a salary of $5,000? A. Yes, sir. 

Q. How long has that been his salary ? A. It has been his salary 
since I have been president. 

Q. Who is the actuary ? A. Charles M. Hibbard his name is. 

Q. Has he received, either directly or indirectly, from the assets 
or property connected with the business of the company, any thing 
since you have been connected with the company as president ? A. 
No, sir; he has not. 

Q. \ on spoke of a counsel, do you have a counsel paid by the 
year for services rendered to the company? A. Yes, sir. 


141 


Q. How much has he received ? A. Seven thousand live hundred 
dollars. 

Q. Who is the counsel ? A. Mr. Johnson. 

Q. And what services has he rendered for the company; what is 
the character of the services he rendered ? A. He has an office in 
the building, such office, to a certain extent, being a department of 
the company, the law department: we go to him for advice and 
counsel on every thing that pertains to legal questions. 

Q. On legal questions pertaining to business of the company ? A. 
Any thing pertaining to legal questions. 

Q. Suppose there is litigation, does he act as attorney or counsel ? 
A. He acts as attorney. 

Q. Without additional compensation? A. No, sir. 

Q. He has no additional compensation ? A. No; I want to be 
understood in that answer; I did not get the drift of your question 
at first; he gets $7,500 a year, as counsel for the company; for that 
salary he draws all the papers that are usually connected with the 
business of the company, contracts and every thing of that sort; he 
gives us advice when we go to him ior advice on everything relating 
to litigations of the company, and for this service he receives $7,500 ; 
that does not include his fees in case of litigation. 

Q. In a litigation you pay him what his services are regarded by 
you as worth, independent of the $7,500? A. Yes. 

Q. While upon that subject, how many litigated cases has the 
company had within the past year, or two years ? A. I couldn't tell 
you, sir. 

Q. Give us some idea; it is a source of complaint here that com¬ 
panies have litigated too much? A. We treat all alike ; I can only 
guess at it. 

Q. How many have you had, say for the past two years? A. I 
should think there was litigated some fifteen or twenty. 

Q. How many have been litigated in the courts, and have pro¬ 
ceeded so far with the litigation as to have been decided by trials in 
the courts? A. Well, I should think half a dozen; I am only 
speaking at random. 

Q. What became of the balance of them; were they comprom¬ 
ised ? A. Some of them were compromised and some of them are 
still in the courts. 

Q. Still pending ? A. Yes, sir. 

Q. How much have your counsel fees been, say for the year 1876, 
other than the $7,500" {you have) paid your counsel regularly as 
counsel ? A. It is between $6,000 and $7,000. 

Q. For 1876? A. Yes, sir. 

Q. How much in 1875, more or less? A. I do not remember 
how much it was, but I should think it was about the same; I do 
not mean to say that was all paid to Mr. Johnson. 

Q. I say counsel’s fees generally ? A. Y es, sir; we' have cases 
pending at different points. 

Q, You employ, in cases pending in the courts, counsel other than 
the regular counsel ? A. ^ es, sir; we do. 

Q. And you have included in this amount the amounts paid to 


142 


those counsel? A. Yes, .sir; precisely the case as it stands; cases in 
other States, of course, included. 

Q. Do you include in the $6,000 cases all over the United States? 
A. Yes, sir. 

Q. You spoke of the medical examiner; who is he? A. Dr. E. W. 
Derby. 

Q. Does he draw a regular salary, or (so much for each person) is 
he paid by per centage ? A. He has $2,500 a year. 

Q. Regular salary ? A. Yes, sir. 

Q. Does he receive any other compensation other than the $2,500 ? 
A. When he goes out of the office to make an examination, he 
receives three dollars. 

Q. Then he has an office in the building? A. Yes ; he is there 
all the time. 

Q. And when he goes out to make an examination, I understand 
you to say he receives three dollars for each examination ? A. Yes. 
sir. 

Q. How much would that additional compensation reach ? A. 
$750 was the amount last year. 

Q. Would that be a fair average? A. It would under the present 
depressed condition of things. 

Q. Before that how much would it be ? A. Double that amount. 

By Mr. W eiant : 

Q. Did he make all the examinations in the city where you issued 
policies? A. JSTo, not all of them; but those that were made from 
the office directly. 


By Mr. Moak : 

Q. That would show the number to be 250 accepted? A. Yes, sir, 
outside. 

Q. What is the usual price paid examiners outside the city ? A. 
It depends somewhat upon the medical organization in the locality. 

Q. You can give us the general idea? A. Medical societies make 
their own fees at some points; our regular rates are two dollars, and 
three where he goes to the house to make an examination ; but, as I 
said before, in some points medical organizations compellus to pay 
live dollars. 

Q. Take the whole that passed in the year 1876, how much w r as 
the entire aggregate for medical examinations throughout the United 
States for all policies issued ? A. Oh, well, I do not know ; I 
should think $3,000 ; I do not know that I can. tell you how much; 
of course, I mean by that outside of the $2,500. 

Q. You mean outside of the $2,500 you paid the regular exam¬ 
iner? A. Yes, sir. 

By Mr. W eiant : 

Q. Do you mean to say you cannot give the (definite) figures ? A. 
I cannot. 


143 


t 


Q. Well, who can? A. Mr. Hibbard can give it; he is the 
actuary. 

By Mr. Moak : 

Q. Don’t your annual report to the Insurance Department show it 
in full ? A. I suppose it does. 

Q. Or does it show it in the aggregate? A. Yes, sir, in the aggre¬ 
gate. 

Q. In addition to that, you have no persons who receive a regular 
salary except the clerks ? * A. That is all. 

Q. How many clerks did you have during 1876 ? A. Well, we had 
a manager of agencies during 1876, who received $5,000. 

Q. Salary ? Yes, sir. 

Q. Who is he ? A. John F. Collins. 

Q. Where did he reside ? A. In Brooklvn; he has his office there. 

Q. What was his business; describe it generally ? A. It was 
looking after the agents and appointing new ones; looking after the 
old ones and taking the general outside supervision of agencies. 

Q. His duties were mostly away from his office then ? A. Yes, sir. 

Q. In addition to the $5,000 you paid his expenses, I suppose? A. 
Yes. 

Q. How much was allowed for expenses, all told, during 1876 ? 
A. That is a difficult question to answer. 

Q. Well, give us your best judgment ? A. I should think about 
$800. 

Q. Hot to exceed $1,000? A. Ho; between $800 and $900; I 
should think about that. 

Q. Was there any sum allowed him for any purpose, or any pre¬ 
tended purpose, outside the $5,000 salary and the $800 for expenses ? 

A. Ho, sir. 

Q. Hot any sum allowed to any one for pretended services or 
expenses? A. Ho, sir. 

O. Either directly or indirectly ? A. Ho, sir. 

Q. What other persons have you, beside the office clerks, connected 
with the company ? A. Only the clerks. 

Q . How many clerks have you ? A. Hineteen. 

Q. How much is the highest salary paid ? A. The chief clerk 
receives $3,500. 

Q . How much is the lowest salary you paid any person, properly 
designated a clerk, as you understand ? A. He is paid twenty dol¬ 
lars a month. 

Q. By the term clerk, do you include all persons such as sweep 
out the building or clean the building? A. Ho, sir. 

Q. Only those properly designated clerks? A. The clerical 
officers. 

Q. How much was the aggregate, paid to the nineteen clerks ? A. 
Between nineteen and twenty thousand dollars. 

Q. Do any of the clerks or their families, receive any other or 
further sum for any alleged services, or for any services whatever, 
from the assets of the company ? A. With the exception of one or 
two or three of them who might have obtained a new policy for 


144 


some friend and were paid a commission on it, no one received any 
thing. 

Q. In such a case, do you pay him any more than the regular 
agent’s commission ? A. We do not pay him the regular agent’s 
commission ; we pay him ten or fifteen per cent, perhaps. 

Q. Well, how much would that amount to for all the clerical 
officers together ? A. I should say $400 or $500. 

Q. Does that include the entire expense, so far as the actual ex¬ 
penses and payment of persons connected with the office is concerned ? 
A. I think it does, with the exception of $250. 

Q. What was that for ? A. For special services that were ren¬ 
dered by the clerks in working at night during the latter part of the 
year when we were closing it up. 

Q. Has the Insurance Department ever made an examination of 
the company? A. Yes. 

Q. When? A. In 1870,1 think, the fall of 1870 or the fall and 
winter of 1870 and 1871. 

Q. That is the time they had a general circus down there, isn’t it ? 
A. Yes. 

Q. The time of the Miller examination? A. Yes, sir. 

Q. Had the company ever previously been examined ? A. Hot 
that I know of. 

Q. Has it since? A. Ho, sir ; I only know that from information. 

Q. You were not connected with the company at that time? A. 
Ho, sir. 

Q. Has any person, on behalf of the Insurance Department, made 
an examination since that time ? A. Ho, never. 

Q. Or asked any information except such as w T as received from 
the annual report ? A. Yes, sir. 

Q. They have, you say ? A. Yes, sir. 

Q. When was that ? A. Well, I think it was in the summer of 
1873. 

Q. What information was then asked for, other than the usual 
return ? A. They asked for a detailed schedule of the premium 
notes, with reference to the policies that we were connected with ; 
the whole details and particulars in regard to it. 

Q. How, there has been a good deal of talk here about the reserve 
of the insurance company ; will you explain to us what the insur¬ 
ance men mean by that; let us see if we understand it alike? A. I 
understand the reserve to be the amount of assets that are required 
by law to be kept by companies as against their liabilities. 

Q. Let us take a supposed case, and see if we can illustrate it; 
suppose 1 am thirty-five or forty-live years old and you should insure 
me, you would estimate the average of the life of a thousand per¬ 
sons of that age in good health ? A. That is the actuarial com¬ 
putation. 

Q. From that you determine the average period of life of per¬ 
sons of that age ? A. Yes, sir. 

Q. About what would be the premium at forty-five years of age 
on $5,000 ? A. It would be about say $190, in round figures, pay¬ 
able at death. 


145 


Q. One hundred and ninety dollars a year? A. Yes, sir. 

Q. That would be the entire premium? A. Yes, sir; the entire 
annual premium. 

Q. Well, now, how much of the $190 would be loading to start 
with for expenses ; what per cent ? A. Well, it depends some on 
the loading on the premiums ; that would vary. 

Q. How much of that would be loaded, as you would term it, for 
expenses independent of anything else ? A. As I remarked before, 
the loading is different in different companies. 

Q. What do you mean by loading; just explain that? A. Well, 
that actual cost of the insurance, etc., is taken , and then the actuarial 
estimate of contingencies is what is called loading. 

Q. Well, contingencies include expenses and everything else? A. 
Yes, sir. 

Q. I want to get at how much you load the thing; to start with, 
you would estimate the actual expenses of the insurance? A. Yes, 
sir. 

Q. And then you add so much for contingencies, including the 
expenses ? A. Yes, sir. 

Q. According to your system of insurance, about how much would 
be the loading of the $190 you have spoken of ? A. The average 
is from thirty-five to forty-five per cent. 

Q. Of the gross premium ? A. Not on the gross premium hut of 
the gross premium. 

Q. Then, to illustrate the matter, you would suppose to be the actual 
value of the insurance, independent of the contingencies and ex¬ 
penses to be the $190, less thirty-five or forty-five per cent of that 
sum ? A. Y es. 

Q Well, when you come to make up your reserve, how do you 
make that up ? A. It is thirty-five per cent; excuse me, that is 
hardly the way to put it; there is that allowance made ; and then 
the theory is, that whatever is saved out of that is returned to the 
company. 

Q. I know it is the theory, but I have never heard anything about 
the practice ? A. I want to be very particular about the words I 
use; I am under oath now. 

Q. About what would be the average of human life at forty-five 
years of age, according to the American experience table? A. About 
eighteen to twenty years. 

Q. Then, in order to form your reserve, in the case the policy 1 
have supposed of a person forty-five years old, where the 
annual premium was about $190; how much would you 
make of that; we would suppose you want to form a reserve 
against the $5,000 you had insured; about how much would you set 
aside from his premium, or in other words, you would calculate, 
during the eighteen years, to set aside enough premium, which, at 
the interest of four and one-half per cent, would make the $5,000, 
would you not ? A. We make the legal reserve here in New York. 

Q. Then you would set aside each year so much of the premium 
w T hich, at an annual interest of four and one-half per cent would 


146 


make the $5,000 ? A. Which, at improved four and a-half^r cent 
would make it. 

Q. Well, that is what I mean, compound interest ? A. Yes. 

Q. Well, about what would that be per annum? A. Well, I 
should say that ought to be pretty near $100. 

Q. It would not be $100 ? A. It ought to be somewhere about 
that, I should think; to start in, you know; it keeps aggregating, 
you know. 

Q. Well, but you have got forty per cent of the $190, and that 
would be seventy-six, which would leave $114; now, if you did set 
aside $100 a year to meet that, what would become of the balance of 
fourteen or fifteen dollars ? A. I am only approximating, of course; 

I do not know. 

Q. There would be a balance beyond that, that would be used for 
some other purpose ? A. Yes, sir ; ordinarily. 

Q. Well, what would you do with that? A. That would go into 
the assets of the company to be used for the purpose of the com¬ 
pany, whatever it might be. 

Q. I am only getting at the theory of where the money generally 
goes to ? A. Yes, sir. 

Q. In other words, an amount then in the case we have supposed, 
you would set aside per annum, would be about fifty per cent on 
the man’s premium? A. Yes ; about that. 

Q. It would be a very small fraction over that, would it not ? A- 
Well, say fifty or sixty per cent. 

Q. Is your company stock or mutual ? A. Mixed. 

Q. Do you mean to say that you have stock and the mutual plan 
also ? A. Yes. 

Q. Are both combined or separate? It is what is called a stock 
and mutual company ; it is. a company formed under the laws of the 
State of Yew York, which requires a deposit of $100,000; it is 
thererore called a mixed company. 

Q. It is a stock company doing business on the mutual plan ? A. 
That is it. 

Q. What dividend has been paid to the stockholders for the last 
five years ? A. Well, from seven to ten per cent. 

Q. Not to exceed that ? A. Not since I have been there. 

Q. Your capital has been what? A. One hundred thousand 
dollars. 

Q. Not to exceed that ? A. No, sir. 

Q. How often has the dividend been paid, about ? A. Semi¬ 
annual. 

Q. We have heard a good deal about the Massachusetts plan; 
does your company do business there? A. Yes, sir. 

Q. Do you comply with the laws of that State ? A. Yes. 

Q. When a man ceases to pay his premium you are obliged to 
carry him for a period beyond that, are you not ? A. According to 
the late decision of the Supreme Court of Massachusetts, we are. 

Q. How do you understand a policy to be in Massachusetts; 
take the man at forty-five, that I have been supposing, who-lias 
paid $190 for five years, and ceases to pay, and suppose his re- 


14? 

serve lias accumulated to near $500— A. Well; suppose lie has 
got $500. 

Q. Yes; how would that reserve be applied to carrying on the 
insurance ? A. It would be applied to carry it as long as it would. 

Q Then the result is, a man would run his policy there longer by 
some months than here ? A. Well, eighty per cent of his reserve 
would be applied to carrying it. 

Q. Then you would carry him a little over two years additional 
on that ? A. Yes, sir. 

Q. And the result is, that a Massachusetts man who deals with 
your company, gets his policy carried for two years longer than a 
New York man? A. Yes, sir; in that sense it does. 

Q. Thus, every man that does business with your company in 
Massachusetts has that advantage over every man who does business 
with you in New York? A. There is that preferment about it; 
under the recent decision of the Massachusetts Supreme Court, 
policyholders of all companies are, to that extent, preferred policy¬ 
holders. 

Q. So that the poor devil who insures here in New York gets cut 
off at once if he ceases to pay his premium, while a Massachusetts 
man runs two years. A. That depends entirely upon the provisions 
in the policy. 

Q. Have you had any provisions in the policies here whereby he 
gets any benefit from it? A. Well, there may be some other pro¬ 
vision. 

Q. What other provision have you for the protection of the New 
York man other than you have in the Massachusetts policies? A. 
Well, we have to some extent in what we call the limited term 
policies. 

Q. What are they? A. Well, take the limited payment poli¬ 
cies, a man who pays ten or fifteen or twenty years. 

Q. You mean he pays his annual premium in that time? A. Yes, 
sir; it is commuted to that amount. 

Q. He pays an increased premium? A. Yes, sir; but he would 
have the advantage of being able to get a paid-up policy for a pro¬ 
portionate amaunt. 

Q. Suppose a man h t forty-five years pays a premium on an ordin¬ 
ary life-policy, his rate would be, you said, $190 a year ; if he paid 
it in ten premiums, it would be how much? A. At forty-five it 
would be $335. 

Q. Per annum ? A Yes, sir. 

Q. Suppose he paid that amount, about how much reserve would 
you set aside for that man’s policy per annum ? A. We should have 
to set aside an amount that would, in ten years, carry the sum for 
which he paid. 

Q. How much would it be in dollars and cents? A. Well, it 
would be in that time about—well, it is a pretty difficult question to 
answer. 


148 


By Mr. Moody : 

Q. The premium paid for ten years would give him $5,000 at 
death? A. Yes, sir. 

Q. About how much would have to be set aside of the amount to 
reach that sum? A. I guess we should have to set aside an amount 
in ten years that would reach fully half the face of the policy. 

Q. Well, how much would you make it ? A. Well, say $200 or 
$210, or something like that per annum. 

By Mr. Moak ; 

Q. Suppose this man, on the limited plan you have spoken of, 
should pay his $335 for five years, and stop, would he get anything ? 
A. Yes, sir. 

Q. Would he be entitled to any thing under the terms of the pol¬ 
icy? A. Yes, sir. 

Q. What ? He would be entitled to a policy calling for sub¬ 
stantially a-half of the amount paid. 

Q. Then, for substantially $2,500, payable at his death? A. Yes, 
sir. 

Q. How many years does he have to pay to be entitled to a paid-up 
policy ? A. Two years. 

Q. Then he gets a policy of a fraction of the amount he has paid ? 
A. Yes, sir. 

By Mr. W eiant : 

Q. Do your policies so provide ? A. The limited policies provide 
for that protection in them; although it does not provide for a tenth 
of the amount he has paid for, the provision is such that he substan¬ 
tially gets the amount lie has paid for after two years. 

Q. A proportionate amount ? A. A proportionate amount of the 
amount he has paid for; it is substantially that. 

Q. Do any of your policies, other than the limited policies, contain 
such a clause ? All the policies we issue have, with one excep¬ 
tion ; the ordinary life policies do not contain the same clause, only 
it is applied in exactly the same way. 

By Mr. Moak : 

Q What is the clause; can you explain it to us? A. I will read 
it: “ And the said company further agree, that if, after premiums on 
this policy for not less than three complete years shall have been 
duly received by them, said policies shall cease in consequence of the 
non-payment of premium thereon, they will, on the surrender of this 
policy duly receipted, and the payment in cash of any loans, credits 
or indebtedness then outstanding against this policy, or due from the 
assured to the company, issue another policy on the life of the person 
whose life is hereby insured, payable as above provided, on which no 
further premium shall be required, for an amount which shall be 
determined on the principles of life insurance equitably applied, that 
is to »ay, the amount insured by the new policy shall be such a sum 
as the net reserve (less per cent of the insurance value lost to the 


149 


company by the change); will purchase in reversionary insurance, 
provided application for such new policy shall be made within sixty 
days after the lapse of this policy for the cause aforesaid. 

Q. What is the blank per centage? A. Eight per cent. 

Q. Do all the policies contain that clause ? A. The ordinary life, 
the limited term and the endowment policies. 

Q. What policies do you issue that do not contain it? A. We 
issue a policy, as we call it, the savings bank policy; that has a diff¬ 
erent clause. 

By Mr. W eiant : 

Q. Supposing I am insured in your company, and have paid more 
than three premiums, and I fail to pay the fourth; before I am en¬ 
titled to the benefit of the provision just read, I must pay you that 
fourth premium, and all other indebtedness to the company ? A. 
Yes; but that is all you will pay. 

Q. So, unless I pay the premium in default before, I cannot avail 
myself of the advantage of that clause; they have not less than three 
complete years in which they must have paid their premiums, and 
then you go on to say that if such policies shall cease by non-pay¬ 
ment of the premium the company will, on surrender of the policy, 
duly receipted, and the payment in cash of the loans and indebted¬ 
ness then outstanding, issue a paid-up policy ? A. I do not under¬ 
stand the way you read that. 

Q. Well, that will include the premium outstanding, will it not ? 
A. No, sir 

Q. Well, what do you mean by it; perhaps if you read it you can 
put a different construction on it ? A. Supposing you had come in 
there and said you wanted credit of $40, say for sixty days, and then 
you had run over that time, we should require you to pay that $40 
of indebtedness. 

Q. I understand you to say that if I came in and applied to bor¬ 
row ? A. Yes ; you have got a quarterly payment due and come in 
and say you cannot meet it; you say k ‘I have about thirty dollars 
and I shall have to owe you seventy dollars; if you will give me 
four months, or two months, I will pay it; ” we do so, and that 
becomes an indebtedness against the policies. 

By Mr. Lang : 

Q. Well, let us see how that thing is effected ; suppose I want 
just that thing? A. We issue the ordinary quarterly receipt when 
a man wants to pay quarterly, and sometimes that man comes in and 
wants to extend the payment, and we take a note from him on our 
form applied as a liability against the policy. 

Q. Do not the notes always provide that, unless they are promptly 
met at their maturity, the policy shall be absolutely void ? A. X es, 
and the policy provides for that also. 

By Mr. Wei ant : 

Q. Do you mean to say that when a policyholder is in default of 


150 


premiums that lie would not fall within this clause that I now read: 
“ the payment in cash of any loans, credit or indebtedness then 
outstanding against this policy, or due from the assured to the 
company ; ” do you mean to say that would not include the indebt¬ 
edness to the company of the premium ? A. I mean to say that if 
application is made within sixty days after the lapse of the policy 
that the premium will not have to be paid. 

Q. Well, suppose it is not made until after sixty days? A. But 
the contract itself expressly stipulates that it must be made within 
sixty days. 

Q. You mean an application for a paid-up policy? A. Yes, sir; 
provided application shall be made within sixty days after the policy 
is forfeited. 

Q. Do you mean to say he is not bound to pay the premium 
not paid up? A. Ho, he is not; because he comes within the sixty 
days. 


By Mr. Moak : 

Q. That is the way you construe it, is it ? A. Yes, sir. 

Q. Has not your company claimed that it must be paid ? A. No, 
sir. 

Q. Have you not stated distinctly that that is the determination 
of the company that it must be paid ? A. Ho, sir. 

Q. Have you not set that up as a defense to a suit? A. Ho, not 
that I know of. 

Q. Well, you would know, would you not? A. I should ; I do 
not know of any such case ; I never set it up myself to my knowl¬ 
edge, and I never knew that it had been set up; we never have 
looked at the clause in any other way than the way I have stated. 

Q. Suppose a man forty-five years of age had paid five premiums; 
his reserve would be about how much ? A. In round figures it 
would be from $2,200 to $2,500; I am a little out of my depth in 
this thing as it is no portion of my business. 

Q. I am asking you to give general ideas ? A. Well, I was talk¬ 
ing about the ten year policy a little while ago. 

Q. I am talking about an ordinary life policy; suppose a man of 
forty-five years has paid his $190 a year for five years, and then stops, 
about how much would be his reserve ? A. It would be about $500 ; 
$400 or $500. 

Q. Well, it would be something along from $400 to $600, wouldn’t 
it? A, Yes. 

Q. Suppose that policy is allowed to lapse, or is forfeited, and 
never renewed, what becomes of that reserve? A. Well, if the ap¬ 
plication is made for a paid-up policy— 

Q. Assuming no application is made and it is forfeited? A.Well, 
it remains in the assets of the company. 

Q. I see you make annual returns of the department; in what 
particular item of the assets of the company does this forfeited re¬ 
serve appear in that return; let me suppose your income there is 
$100,000 of reserve that has lapsed or been forfeited and never called 


151 


for by the owner, nor any call made for a paid-up policy, in what 
item of the assets would that reserve appear, in the returns to the 
department ? A. It would appear in the outstanding amount of lia¬ 
bility ; it would be merged in the liability column. 

Q- ^ es, but you have got $500 of the man’s money? A. Yes, 
and it would appear in the assets of the company. 

Q. Suppose you take the returns of 1875, and there was $100,000 
worth of forfeited reserve that year, where would that appear? A. 
It would appear in the surplus, the gross surplus on the policyhold¬ 
er’s account. 


Q. How would that be gross surplus on the policyholder’s account 
if the policyholder had gone out? A. Well, it would be for the 
benefit of those that remained in. 

Q. You declare dividends, don’t you, in the company? A. Yes, 
sir. 

Q, To policyholders ? A. Yes, sir. 

Q. How frequently ? A. Annually. 

Q. About what, for the last two or three years, have been tin 
dividends, say on a $5,000 policy: such a one as I have supposed at 
forty-five years of age ? A. Well, the dividends have been from, 
ten to twenty per cent. 

Q. Ten to twenty per cent on the reserve, or on the premium ? 
A. On the gross premium. 

Q. That would make from nineteen to thirty-eight dollars a year ? 
A. Yes. 

Q. Well, now, suppose a man don’t call for his dividend at the 
end of the year, what becomes of that ? A. Well, that is an instance 
that don’t occur very often. 

Q. Yes, it does, because our savings banks build elegant institu¬ 
tions from money that is never called for; I suppose the insurance 
companies are not any better than our savings banks? A. Well, 
whatever is there, is left there in the same way. 

Q. To the credit of that individual ? A. No, for if his policy goes 
out, it goes out with it. 

Q. Well, suppose his policy remains? A. Then he can come and 
get it any time. 

Q. Does it remain credited to him ? A. It is not credited to him ; 
he has so much theoretically set aside for dividends, but it is charged 


up 


Q. It remains in a gross sum ? A. Yes, sir; it remains in a gross 


sum. 


Q. Well, where would that be in the returns, so that you could 
not touch it ? A. If it remains, it would appear in the gross surplus 
to policyholders. 


Bv Mr. Flo yd-Jones : 

«/ 

Q. When he comes to pay his premium, he calls for his dividend, 
don’t he? A. That is the case in 999 cases out of 1,000; every one 
that comes up says “ I want my dividend,” or takes a certificate of 
additional insurance, and it is added to the policy. 


152 


By Mr. W eiant : 

Q. Will you give us your construction of this clause which I shall 
read from the policy: “We will issue another policy on the life of 
the person whose life is hereby insured, payable as above provided, 
on which no further premium shall be required, an amount which 
shall be determined on the principles of life insurance equitably ap¬ 
plied ?” A. Yes, sir ; but it goes on further with “that is to say.” 

Q. Well, read that? A. “That is to say, the amount insured by 
the policy shall be such a sum as the net reserve, say less eight per 
cent of the insurance value loss to the company by the change, will 
purchase a reversionary insurance, that is an insurance payable at 
death.” 

Q. Is there any exact method by which you arrive at the-value of 
that policy in all cases ? A. I can give it to you. 

Q. Is there an exacs method or rule? A. There is an actuarial 
rule. 

Q. Is there anything left to the discretion of the officers of the 
company? A. No, I think not; I would rather you would ask our 
actuary about that; that is my belief about it; that there is nothing 
left to discretion. 


By Mr. Moak : 

Q. Suppose he does not call for the dividend, what becomes of his 
dividend ? A. It is left in the company. 

Q. It is not left so that all the balance of the shareholders share 
in it; is it not set apart that it belongs to him ? A. No ; I know 
of no rule of that sort in the company at all. 

Q. Can you designate in what item that would appear; does your 
company, in making its annual report to the Superintendent of the 
Insurance Department, separately state the aggregate of the divi¬ 
dends declared any where ? A. It states the aggregate of the divi¬ 
dends paid. 

Q. Does it state the aggregate of the dividends declared ? A. 
No, sir ; it does not. 

Q. Is there any way from any return or from any other way that 
the Insurance Department can determine from the return made to 
them how much of the dividends are unclaimed? A. I think not. 

Q. That can only be determined by a careful examination of your 
books? A. Yes, sir. 

Q. Let us take another case: suppose the man of forty-five has 
paid his premium for the five years, and he does not take a paid-up 
policy; there is say, four or five hundred dollars of the reserve that 
stands to the credit of his policy, or did before it was forfeited ? A. 
Yes, sir. 

Q. Well, what becomes of that reserve? A. If he forfeits his 
policy ? 

Q. Yes, forfeits it absolutely? A. Why, it stands right in the 
assets of the company. 

Q. Is there any item in the annual return to the Insurance Depart¬ 
ment in which it would appear? A. Not that I am aware of. 



153 


Q. Or in other words, is there any thing in the annual return you 
make from which the department or any one else can tell how much 
reserve has been forfeited ? A. 1 know of nothing. 

Q. Can you tell say, for instance—I see here a return for the year 
1875—can you tell how much there was of the reserve forfeited in 
the year 1875 by that return? A. I cannot. 

Q. Can you approximate it in any way ? A. I cannot; because 
my attention has not been called to it. 

Q. 1 our policy seems to contain a clause which no other policy 
that I have discovered does give to the insurer, that is the right to a 
paid-up policy? A. Yes, sir. 

Q. About what proportion of the persons who forfeit their pol¬ 
icies take paid up their policies? A. Well, guessing at it, 1 should 
say from seventy-five to eighty per cent. 

Q. And then there is from twenty to twenty-five per cent absolutely 
forfeited ? A. Yes, sir. 

Q. Is there any way or system by which, when a man comes into 
the office and desires to continue his policy and cannot, by which 
you pay him a certain sum out of the reserve for the surrender of 
it ? A. That is so where the contract expresses it; but our contract 
provides for a paid-up policy, but no surrender of values. 

Q. I want to get at the actual practice, because a great many claim 
they have something to learn in those contracts; supposing an in¬ 
surer at forty-five, for $5,000, had paid for five years and cannot 
continue; suppose, if you please, that I am the party, and come to 
you and say, “ I cannot continue this policy; how much will you 
give me for its surrender; will you purchase it ?” A. I do not know 
whether I would or not; I would not bind myself to ; we have no 
rule on the subject. 

Q. It is simply a matter of doing as you please, then, is that it ? 
A. The contract expresses that we shall give a paid-up policy, and I 
should say to you, if you come to me and said any thing about it, I 
should say our contract provides for a paid-up policy, and I will give 
you that. 

Q. You would not give me any cash value ? A. I wouldn’t &ay I 
would not do so. 

Q. But you wouldn’t render yourself under any obligation to do 
it ? A. No, sir. 

Q. Has your company done it ? A. Yes, sir. 

Q. To what extent ? A. To a pretty large extent heretofore. 

Q. Can you give any thing like the amount for last year? A. We 
report $1,500,000 paid to policyholders, and that includes every 
thing. 

Q. I mean for this particular item ? A. No, sir; I cannot; I can 
give the aggregate; those figures will come better from the actuary. 


By Mr. Flo yd-Jones : 

Q. You spoke of a policy having a clause in it; have you it in 
other policies ? A. We have the same clause in several of our other 
policies. 



154 


By Mr. Moak : 

Q. They all contained the same clause, I understand you to say t 
A. Yes, sir. 

Q. Other companies’ policies do not contain that clause that you 
have in yours ? A. Well, I have an impression that the Mutual Life 
polices contain it. 

By Mr. Lang. 

Q. If I understand you right, a man who has paid for five years 
in your company, he is so married to it that there is no way of 
getting a divorce and getting any thing out of it ? xY. Except by a 
paid-up policy, he cannot. 

Q. Well, even then, he would not be divorced; there is still a 
contract between you and him ? A. Yes. 


By the Chairman : 

Q. Is the payment of money for lawyers’ fees dependent upon the 
financial condition of the company? A. Yes, sir ; certainly. 

By Mr. Moak : 

Q. Let us illustrate this matter further; a man insures in the com¬ 
pany at the age of forty-five and pays you $190 for five years; then 
he comes and asks you to pay him what is called its present value; 
that is what you term it, is it ? A. Yes, sir. 

Q. About what would be the present value of his insurance policy 
under those circumstances ? A. That is a remarkably broad question, 
Mr. Moak. 

Q. Well, I don’t know ? A. Well, it is ; there are so many things- 
that come in as part and collateral to the question. 

Q. Suppose it to be an ordinary case of a man at the age of forty 
five who had insured and paid his premium, amounting to $190,’ for 
five years, about what would be the present value of his policy ? A. 
It is an actuarial question which I will not venture to answer. 

Q. Well, can’t you answer approximately? A. Yes, sir. 

Q. Or, in other words, you said the value of that policy would be 
from $400 to $600 ? A. Yes, sir. 

Q. Now, about what would be the present value of the reserve ? 
A. Well, I think the rule of the various companies varies. 

Q. I mean in your company ? A. Well, I don’t know ; I should 
say that the actuarial rule would be seventy or seventy-five per cent, 
or somewhere along there. 

Q. Of the reserve estimated to the aggregate of the policy ? xY. 
Something of that sort; I do not know exactly what it is. 

By the Chairman : 

Q. Independent of the interest? A. Oh, no, the interest would 
be the reserve. 


By Mr. Moak : 

Q. In the case I have, suppose, where the reserve is from four to 


155 


six hundred, and you pay the party who holds the premium its 
present value of seventy-five per cent, what would become of the 
balance of that reserve? A. Well, if you will allow me, I will make 
a little explanation in regard to that matter; when a live insurance 
policy, that is to say, when a man who has a running policy goes 
out of the company, there is a certain loss of vitality, provided 
he is a live (healthy) risk. 

Q. Well, I can see, with (a) very good reason, why you take out 
twenty or twenty-five per cent, but I want to know what becomes of 
it? A. It is left in the general assets of the company, the same as 
other claims. 

Q. That would appear in the return of the assets as so much cash, 
in hand? A. Yes, sir. 

Q. To the benefit of the policyholder or the stockholder ? A. The 
general policyholders. 

Q. Well, now, let me see; your company you say, has a capital 
stock of $100,000 ? A. Yes, sir. 

Q. Who vote for the directors; only the stockholders ? A. No,, 
sir; the charter provides that the stockholders shall vote, and every 
person who holds $500 of additional insurance, or at least certificates 
of the dividends payable at the termination of the policy. 

Q. Well, they shall vote also ? A. Yes, sir. 

Q. In other words, your directors are elected by the stockholders^, 
and other persons who hold $500 of additional insurance ? A. I said 
the charter permitted them to vote. 

Q. How many persons are there, or about how many of your 
entire policyholders who had that cpialification for voting, say on the 
1st of January, 1877? A. There were several hundred; I do not 
know how many. 

Q. Well, several hundred may mean two or fifteen ? A. Well,, 
no ; I think there were 200, probably ; I should say 200, probably 
there may be more than that. 

Q. What is the amount of your shareo? A. Twenty-five dollars. 

Q. Then each twenty-five dollars has a vote ? A. Yes. 

Q. Well, supposing a man has $2,500 additional insurance, does 
he have one vote or twenty-five votes ? A. He has one vote ; it is a 
vote for every $1,000 additional, not $500 ; I was mistaken. 

Q. Well, then there must be a good many more than 200 have the 
right to vote ? A. Yes, there are. 

Q. Well, each stockholder that holds twenty-five dollars of stock 
has a right to vote? A. Yes. 

Q. And each person who has $1,000 additional insurance also has 
a vote ? A. Yes, sir; I should think there must be from twelve to 
fifteen hundred that have the additional policy. 

Q. When was the last election ? A. Last April. 

Q. How many directors did you have ? A. We elected a class for 
that year; I think there were four or five. 

Q. How many do you have in all ? A. Thirteen. 

Q. How many are elected each year ? A. Four are elected each 
year for two years and five are elected one year. 


156 


Q. Then every year you elect four for two years and on one year 
you elect five ? A. Yes, sir. 

Q. So that at least a portion of them go out each year ? A. Yes, 
sir. 

Q. How many votes were cast for the directors in 1876; to your 
recollection say about how many ? A. Well, I should think there 
were 3,000. 

Q. There would be 4,000 stockholders entitled to vote ? A. Yes, 
sir. 

Q. And say 1,200 policyholders ? A. Yes, sir. 

Q. Which would make 5,200 ? A. Yes, sir. 

Q. And you say there were 3,000 of the aggregate votes cast ? A. 
Yes, sir. 

Q. What proportion was cast by the stockholders and what pro¬ 
portion by additional insurance ? A. I do not know ; 1 do not know 
that any policyholders voted. 

Q. Do you know whether any policyholders ever did vote ? A. I 
don’t think they do as a rule. 

Q. Are they allowed to vote by proxy in your company ? A. 
Yes, sir. 

Q. The policyholders ? A. Yes, sir. 

Q. The stockholders also ? A. Yes, sir. 

By Mr. Wei ant: 

Q. Did any of the policyholders vote by proxy at the last election ? 
A. Ho, sir, I think not. 

By Mr. Moak : 

Q. The officers, so far as your knowledge is concerned, have been, 
since you have been connected with the company, elected by the 
stockholders ? A. I think so, substantially. 

Q. Who owns the largest amount of stock in the company ? A. 
I do. 

Q. How much? A. I think about $54,000 worth; I forget just 
what it is. 

Q. Any less than that ? A. Ho, sir. 

Q. Did you cast your votes upon the amount of stock Jield by you 
last year? A. Yes, sir. 

Q. Then your own votes would elect the directors? A. Yes, sir. 

Q. Well, who holds the next highest number? A. Mr. Johnson. 

Q. Well, how much does he hold? A. I think about $12,000. 

Q. Well, who has the next highest number? A. Well, I think it 
is John Henderson, the tobacconist. 

Q. Well, how much does he hold ? A. Ho, I think I am wrong ; 
I think it is Isaac Kipp, of Peekskill. 

Q. How much does he hold ? A. I should say $10,000. 

Q. How much does Mr. Henderson hold? A. Well, I think it is 
about $6,000 or $7,000. 

Q. Well, have you several others that hold from four to five 


157 


thousand each ? A. No, the rest of the stock is pretty well scat¬ 
tered. 

Q. Among how many different persons ? A. Oh, I could not tell 
you ; there are quite a number of persons hold small amounts, four 
shares, six shares, and some more ; as low as two shares ; I never saw 
them. 

Q. Plave you ever applied to the policyholders for proxies ? A. 
Not since I have been president. 

Q. Has any one else applied for proxies to those parties ? A. Not 
since I have been president. 

By Mr. Weivnt : 

Q. Have you any policy of insurance in the company on your 
life? A. Yes, sir. 

Q. How much? A. Twenty-two thousand five hundred dollars. 

By Mr. Moak : 

Q I want to get at these proxies; I do not think that matter 
applies to your company particularly? A. No, sir; it does not; I 
have never seen a proxy since I have been there. 

Q. I want to ask whether, to your knowledge, the proxies have 
ever been obtained by any persons from the policyholders that would 
be entitled to vote on their extra insurance? A. Never, to my 
knowledge, since I have been president. 

Q. You say you have never seen any ? A. No, sir ; I never heard 
there was any. 

Q. You have how much insurance on your life? A. Twenty-two 
thousand five hundred dollars. 

Q. In your own company ? A. Yes, sir. 

Q. When was the application made out; how long ago? A. I 
had one of the policies since 1863 or 1862 ; I forget which. 

Q How much was that ? A. That is $2,000. 

Q. Has that been increased any by an additional insurance, or 
have you taken your dividends instead of additional insurance ? A. 
I think I took mv dividends; I do not remember how it was in re- 
gard to that policy. 

Q. In 1863 were you connected with the company ? A. Yes, sir. 

Q. In what capacity ? A. I was an agent for them. 

Q. Well, when did you get the balance? A. Well, I have had 
that strung along for the last ten or twelve years. 

Q. Well, give us as near as you can about when, and how much 
each time? A. Well, I guess I got a $5,000 policy ; that must be 
ten or twelve years old, and then a $10,000 policy that I took out 
three or four years ago. 

Q. At that time you were connected with the company in what 
capacity ? A. I think when I took that I was vice-president. 

Q. Well ? A. Well, I have not taken out any policy within the 
last two or three years. 

Q. Still you lack about $5,000 of the twenty-two ; when was that 
taken out ? A. I should say about five years ago ; some time within 


158 


the last live years; I have not taken out any within the last two or 
three years. 

Q. Did you make an application in the usual way for a policy ? 
A. Yes, sir. 

Q. And paid the fall amount of premium exacted from all per¬ 
sons in such cases ? A. Yes, sir. 

Q. You paid the usual amount of premium, you say? A. Yes, 
sir. 

Q. In what way ? A. I think it was by check ; I paid it in cash, 
any way. 

Q. Either by check or in bills ? A. Yes, sir. 

Q. Every dollar of it ? A. Yes, sir. 

Q. Did you pay for the one you took out when agent ? A. Yes, 
sir; I think I took that out three or six months before I became con- 
nencted with the company ; I was not an agent, but I was a solicitor 
for the company at that time; I used the technical word agent, but I 
was only solicitor for the company, and I think I took that policy 
out three or six months before I became a solicitor; I paid for it, 
same as any one else would. 

Q. About when was that taken ? A. About two years ago. 

Q. When he became connect d with the company? A. No; he 
has been connected for about seventeen years with the company. 

Q. What is his age ? A. When he took out his policy he was 
about lifty-two, or something like that; he is about lifty-four now 

Q. About what would be the premium at that age? A. I think 
he paid something like $700. 

Q. A year ? A. Yes, sir. 

Q. Did he make application in the usual way ? A. He did. 

Q. And paid the usual amount of premium in cash? A. Yes, 
sir; he was passed upon by the doctor, the same as any other appli¬ 
cation. 

Q. By what doctor was he examined ? A. By Dr. Derby 

Q. You do not know whether he ' T as submitted to the same rigid 
examination that other people are, do you ? A. I shall answer that 
in this way: I know I was. 

Q. In each instance? A. Yes, sir. 

Q. The question whether the doctor would find a thing or not 
depends upon his diligence ? A. Yes, sir. 

Q. Is that all the insurance the secretary has ? A. Yes, sir, in 
our company. 

Q. Has your counsel any in your company ? A. Hot any; he 
applied for some and we rejected him. 

Q. How many of your directors are insured in your company be¬ 
sides yourself; vour secretary is not a director, I take it? A. Yes, 
he is. 

Q. How many of the other directors are insured, then ? A. I 
should think all, except one or two. 

Q. About what is the average of the insurance? A. Well, there 


159 


is one of them has, I think, about $25,000, $20,000 or $25,000; I 
guess the smallest amount is $5,000. 

Q. Did each of them apply for the insurance in the usual way ? 
A. Yes, sir. 

Q. And were they examined by the physician in the usual way ? 
A. Yes, sir. 

Q. Did they pay the usual premium promptly? A. Yes, exactly 
the same as anybody else. 

Q. Can you give the aggregate of policies that the directors hold? 
A. No, I cannot. 

Q. You cannot ? A. No, sir, my attention has not been called 
to it; I could tell very easily if I were in New York. 

Q. Now, to go to the question of loans; in 1876 what were the 
aggregate assets of your company, say at the 1st of January, 1877? 
A. Well, somewhere about $7,000,000. 

Q. Of what did that consist ? A. Well, it consists of mortgages 
and real estate. 

Q. How much in mortgages? A. Well, I have not got the figures 
here. 

Q. You have not got them here at all {for the jpast year) ? A. 
They are in the statements that the company made to the de¬ 
partment. 

Q. Have you made an annual report to the Superintendent of the 
Insurance Department? A. Yes, sir, that contains the exact figures; 
I can give you an approximate idea, if that will do. 

Q. I will examine you a little on the returns of 1875 ; but before 
I go on with that I will ask you the question as to the method of 
doing business so far as agents are concerned ; how many general 
agents had you at the commencement of 1877 ? A. We abandoned 
the use of the term “general agents’ 1 several years ago and all our 
agents are now called simply agents. 

Q. Well, how many agents have you ; don’t you have any persons 
who are agents for the State of New York ? A. No, sir. 

Q. Well, how many have you for the State of New York? A. 
Well, we had, I suppose, about six at that time ; five or six agents 
located at different points, who had a certain amount of territory 
each ; they used to be called general agencies, but we dropped the 
term “general’’ because there was some legal complication in it. 

Q. Where are they ? A. We had one at Rochester, a man named 
Brewster, and we have Mr. Bridgeman at Buffalo, and we have two 
in New York, but I really cannot give you their names. 

Q. One in Brooklyn ? A. Yes; we had one in Brooklyn at that 
time ; we have not any there now; we have one at—I cannot think 
where they are now; there are two or three more besides those I 
have named. 

Q. Each of them have territory farmed out to them which they 
appoint sub-agents for, I presume ? A. Yes, sir. 

Q. And those agents are responsible to you for their sub-agents, 
and the sub-agents are responsible to them ? A. That is the theory. 

Q. What was your usual allowance to agents on the first premium ? 


160 


A. Well, our commissions were, from any of the ordinary appli¬ 
cation, from twenty-five to thirty per cent on the first premium. 

Q. How much on subsequent premiums ? A. Well, we made a 
contract with them; we gave them four renewals at seven and a half 
per cent. 

Q. Do you know of any case exceeding that ? A. I do not know 
of any instance in which we have exceeded that. 

Q. How much was the largest sum received by any agent of your 
company in the year 1876? A. It is so small I do not like to tell 
you ; it is a very small sum. 

Q. Well, the largest sum received by your agent for 1875, say ? 
A. I do not think any of them received on the application of pre¬ 
miums during 1876, over $1,000 ; that was the excess to any of the 
persons. 

Q. Well, say for 1875? A. Well, I should think $2,000 would 
be a fair average in 1875. 

Q. How much was the total amount paid by your company to 
agents in 1875 ? A. That includes all commissions on renewals, and 
every thing of that sort; you will see it in the return ; it is for com¬ 
missions to agents, $67,109.83. 

By Mr. Wei ant ; 

Q. Do you pay any commission on renewals after four renewals ? 
A. Ho, sir. 

Q. The per centage on renewals ends after the fourth renewal ? 
A. Yes, sir. 

By Mr. Moak : 

Q. How much were the entire assets of your company on the first 
day of January, 1877 ? A. They were about $7,000,000. 

Q. How were they divided, mortgages how much ? A. Mortgages, 
well, say $2,200,000. 

Q. Well, what else ? A. I am very sorry I did not know you 
wanted this or I would have brought it along; well, premium notes, 
I may be $200,000 out of the way, but I will guess at it, say $2,600,000 
I should think in premium notes; I may be considerably out of the 
w T ay, but I will give you the best I can ; there is real estate, in round 
figures, say between $900,000 and $1,000,000; cash, $106,000 I 
should think it was : government bonds about, well, I do not know ; 
about $400,000 or $500,000; I think $500,000 in government 
bonds. 

Q. Well, what else? A. Well, say loans on call $65,000; that is 
on call stock; the aggregate of the other stocks and bonds I cannot 
remember just what it is. 

Q. There has been a report made and filed ? A. Yes, sir. 

Q. And you are willing to testify that that report is true ? A. 
Yes, sir. 

Q. And contains a full statement of your bonds? A. Yes, sir. 

Q. Does your company own any real estate? A. Yes, sir; w T e 
have from $900,000 to $1,000,000 worth. 


161 


Q. Have you a building in New York that you occupy for the 
purpose of business? A. Yes, sir. 

Q. Where is it located ? A. On the corner of Park Place and 
Broadway. 

Q. About what is the value of that ? A. Two hundred and twenty- 
five thousand dollars. 

Q. How much did it cost you? A. Well, it cost, I think, originally 
about $215,000. 

Q. And when did it cost that ? A. It was built by the Security 
Fire Insurance Company, and in the winter of 1871 or v 72, after the 
Chicago fire a receiver sold it at auction and we bought it. 

Q. For how much ? A. I think we paid at that time $162,500; 
it is my recollection, although I was not there. 

Q. What time did you say you bought! A. I think it was in the 
winter of 1871 or beginning of 1872. 

Q. And you paid $162,000 for it? A. Yes, sir. 

Q. Have you put any improvementss in it since? A. Yes; we 
have done some. 

Q. To what extent—what amount ? A. I don’t know ; I can’t 
tell you. 

Q. You can give us some idea, I suppose? A. I don’t know; I 
never examined them {that). 

Q. You have no idea whether it was $10,000 or $500,000? A. Oh, 
I know approximately; I should think there had been $20,000 
spent on it. 

Q. Do you own any other real estate in the city of New York? A. 
Yes, sir; we own some property on Fifty-second street that we 
bought under a mortgage foreclosure-. 

Q. What is that property ? A. There are nine full lots 
on Fifty-second street and nine gores running through to Fifty-third 
street; not fronting on Fifty-third street, but running through there 
to a lane called Spiker’s lane, and they would front on that. 

Q. Is there a building on each of those lots? A. No, sir; there 
are three buildings. 

Q. On nine lots? A. Yes. 

Q. How much was the mortgage on that, or about how much ? A. 
I can’t tell you ; I can’t do so because the mortgage was given long 
before I came into the company. 

Q. It has been foreclosed since ? A. No, sir ; long before I came 
into the company; it was ten or twelve years ago ; we are holding 
it by permission of the department. 

Q. Flave you a righ to hold it? A. We have had permission of 
the department. 

Q. Well, how much do you value that at? A. 1 think the value 
of that is forty or forty-five thousand dollars. 

Q. What was the character of the buildings on it ? A. They are 
frame dwelling-houses. 

Q. What is the size of the lots ? A. The nine lots on Fifty-second 
street are twenty-five by 100, and the other lots are twenty-five feet 
front and run fifty or sixty feet deep. 

Q. Have you anv other real estate in New York? A. We have, 

11 


162 


I think, either one or two houses that were bought in last year, at 
Delmonico’s place, they call it; it is not far from Morrisania. 

Q. Is it wuthin the city limits ? A. Yes, sir, it is (at) in One 
Hundred and Sixty-third street. 

Q. IIow many lots do you own there ? A. I think two houses 
there. 

Q. Brick or wood ? A. Brick houses. 

Q. How much were the mortgages upon those two houses ? A. 
Well, I think, they must have l)een about four or five thousand 
dollars. 

Q. Upon the two? A. Yes ; on the two houses. 

Q. And how much was the property bought in for ? A. It was 
bought up for the amount of the mortgage and expenses. 

Q. Are you acquainted with the value of real estate in that local¬ 
ity ? A. Yes, sir. 

Q. About what is its fair value in the market now ? A. I think 
it is worth now what it stands us in. 

Q. That is your opinion ? A. Yes, sir. 

Q. Well, how much is that ? A. I forget how much it is; there 
are two mortgages of about $3,500 each, and there were other mort¬ 
gages of about $5,000, and which ones these particular houses repre¬ 
sent I don’t know ; my impression is, the house and lot stand us in 
at $5,000 each. 

Q. And in your opinion they are worth that? A. Yes, sir. 

Q. They are brick ? A. Three story brick houses. 

Q. Do you own any other real estate in the city of New York ? 
A. I don’t think of any other. 

Q. In the city of Brooklyn?- A. Yes, sir; we own some; quite a 
large number of brown stone houses; we are wealthy in brown 
stone houses. 

Q. Well, how much is the aggregate real estate you own? A. 
Well, it is between $900,000 and $1,000,000. 

Q. In Brooklyn? A. No; it must be $400,000 I should think, 
at a rough estimate, in Brooklyn. 

Q. That was purchased under foreclosure of mortgages ? A. All 

of it. 

Q. Within what length of time have they all been foreclosed ? 
A. Well, I think the foreclosure on some of them were com¬ 
menced— 

Q. Give the first time ? A. I should say that they all came to 
the company since I became president. 

Q. Within the past two years? A. Yes, sir. 

Q. About what was the face of the amount of the mortgages fore¬ 
closed for the purchase of this real estate ? A. Well, I don’t know; 

I can’t remember. 

Q. You say you have got about $400,000 worth of real estate in 
Brooklyn; ,were the mortgages more or less? A. That represents 
the actual expense. 

Q. Well, what was the face of the mortgages? A. Well, I don’t 
know ; I should think it was about $375,000 ; I don't know ; I am 
going it perfectly wild on these matters, Mr. Moak. 


163 


Q. Well, eacli insurance company have done the same thing; you 
give us the best you can, and that is all we have got from the others ? 
A. I am trying to answer your questions the best I know how. 

Q. Are you familiar with the value of real estate in Brooklyn ? 
A. I have been all over it. 

Q. Well, what would you say was its fair market value to-day? 
A. Well, I believe the entire property is worth what it cost us; you 
understand I am not pretending to say what it would sell for cash 
to-day , at what price; but I think that a fair valuation of it 
would bring it to the amount to-day that it cost us. 

Q. How much, in your opinion, would it sell for to-day? A. That 
is not a question I can answer; it is impossible to tell; Mr. Augus¬ 
tus Storrs bought a house in State street yesterday for $12,000, and 
I don’t think that any fair minded man would value it at over that 
jto-day, at its present market value, yet I suppose it cost at least 
$16,000 for the house, independent of the lot; these cases might 
<come in just such a way. 

Q. Well, perhaps, that is hardly a fair question to ask about what 
per cent does your real estate in New York, exclusive of the build¬ 
ing you own for offices, bring in, exclusive of taxes ? A. I should 
.not think it paid over three and one-half or two and one-half per 
nent. 

Q. Well, take the real estate in Brooklyn? A. I put it all in 
together. 

Q. You mean the real estate in Brooklyn in the same manner? 
A. Yes, sir. 

Q. The balance of real estate you have; where is it, except in New 
York and Brooklyn; in the State? A. No, sir; I don't know that 
we have any in the State; I don’t remember that we have any. 

Q. Well, where is the balance of it situated, then? A. Well, I 
think, probably, I have not stated the amount of real estate in Brook¬ 
lyn large enough. 

Q. Have you real estate anywhere else ? A. I think I have stated 
it a little too low in Brooklyn; we have some real estate in New 
Jersey, and we have some in Jersey City, and some real estate in 
Newark. 

Q. What is the aggregate of real estate in New Jersey? A. Well, 

I should say from $125,000 to $150,000; somewhere about there. 

Q. That was procured on foreclosure of mortgage ? Yes, sir. 

Q. Mortgages were made in the usual way ? A. Y es, sir. 

Q. The property appraised by whom? A. Well, these mortgages 
were all made before I went there; one of them was appraised, I 
think, by the appraiser of the Mutual Life Insurance Company in 
New Jersey, W. Y. Cliedester. 

Q. The others were appraised by appraisers in the regular way ? 
A. Yes, sir. 

Q. What per centage of the appraised value do you loan ? A. I 
■should think from fifty to sixty per cent; forty per cent in some 
cases; I should think fifty per cent would be a fair average. 

Q. Were the mortgages secured by the buildings on the real estate 
in case they had any on them ? A. \ es, sir. 


164 


Q. As collateral in all cases? A. Yes, sir. 

Q. And, as compared with the amount of the mortgages, what 
was the cost of the land to the company; say the land cost you 
$150,000 in Yew Jersey, what was the face of the mortgages on 
which the land was sold ? A. Well, I think it approximated pretty 
close to that. 

Q. You think it was bought for substantially the face of the mort¬ 
gages and cost? A. Yes, sir. I should think so. 

Q. Do you own any real estate anywhere else than in Yew York, 
Brooklyn and Yew Jersey? A. I don’t know of any. 

Q. You have no offices in any other place? A. Yo, sir. 

Q. Well, in regard to insurance upon the buildings; in how many 
companies was that obtained ? A. I should think w r e had about fifty. 

Q. In about fifty different ones? A. Yes, sir. 

Q. Can you mention the one in which you had the largest insu¬ 
rance ? A. It is the Commercial Union, of London. 

Q. What proportion of the policies in that company have you ? 
A. Well, I don’t know; I should think there must have been about 
a third; well, no, that is too much, but I can say generally that they 
have a policy on almost any thing they will take or that they would 
take ; we do not require that the mortgagee shall insure there or 
any where else; we never indicate in what company he shall insure ; 
we never made any such rule as that, providing it was a good com¬ 
pany. 

Q. You had never any rule by which you indicated which you 
prefer, ao long as it is solvent ? A. Yo; we only want a good com¬ 
pany ; then, in addition, we have a (the) Fireman’s association, the 
Brewers’ and Malsters’ company, and we have a considerable line in 
the Continental fire, and then scattered policies, as I said, in prob¬ 
ably forty or fifty different companies. 

Q. Have you ever, in any case, made it a condition to making a 
loan that you should even indicate the company in which insurance 
should be obtained ? A. Yo, sir, never. 

Q. Have you or any of the officers of the company, to your 
knowledge or information that you have got, or any one in the 
employ of the company ever received any thing in consequence of 
the indication of the company from which policies should be pro¬ 
cured ? A. Yever, to my knowledge. 

Q. Or to your information ? A. Yo, sir ; there is a commission 
on every one of the companies (premiums) where we pay it. 

Q. The insurer pays that? A. Yes, sir; but we pa}^ very fre¬ 
quently for him; it very often occurs that we pay the renewal, and 
when we do that we get a commission. 

Q. How much ? A. Fifteen per cent on the premium. 

Q. To whom was the premium paid ? A. It goes right into the 
company the same as any other assets. 

Q. That goes into the assets of the company? A. Yes, sir. 

Q. It is not paid to or received by any individual ? A. Yo, sir ; 
it goes right into the company. 

Q. Does any one receive any thing from that ? A. Yo, sir ; not 


165 


to my knowledge or information ; no one receives a cent of benefit 
from it. 

Q* Now, say a man makes an application in the usual form for a 
loan, and after being proved by the president and finance committee 
or whatever method you have, you send him to the attorney indi¬ 
eating the amount you will loan on the property, is there any per¬ 
centage paid by any one to the attorney ? A. That I would not 
know. 

Q. Who pays the attorney for his services ? A. The borrower. 

Q. Well, what is the usual percentage paid by the borrower? A. 
I don t know that there is any per cent; I (should) wish to say 
that I have had very little experience in making loans; I have m&de 
very few loans since I have been president; I don’t know what the 
*ule is. 

By Mr. Weiant : 

Q. Did you make any while vice-president ? A. No, sir. 

Q. Well, how many have you made since you were president ? 
A. Well, probably (not) six or eight or ten. 

Q. Do you loan outside of the city of New York in this State ? 
A. Yery little. 

Q. In what counties ? A. Jefferson. 

By Mr. Moak : 

Q. You know nothing about what the rule is in such cases ? A. 
No, sir. 


By Mr. Skinner : 

Q. Have you an attorney in Jefferson County ? A. No, sir. 

Q. Who makes your searches in the counties outside of the city? 
A. I don’t know; I suppose the clerk does; our counsel can tell; 
I don’t know any thing about the working of that department. 

Q. Who appraises the property ? A. They are the appraisers ap¬ 
proved by the Insurance Department; we have appraisers in every 
county almost, and I suppose they do it. 

Q. And you base your loan on the valuation they fix ? A. 

Exactly. 

>/ 

Q. Well, are you not liable to be deceived in making loans that 
way ; are you not afraid you will loan a larger sum than you would 
if you were to go and examine the property yourself? A. Well, we 
have personal knowledge beside; we take other precautions, and I 
believe it is the opinion of most of the insurance people that the 
appraisers of the insurance department are, as a rule, very reliable 
appraisers. 

Q. Well, but aren’t companies liable to be deceived in making 
loans in that manner far beyond the value of the property on which 
they loan ? A. Well, I don’t know that any company can appoint 
such men as those appraisers; if you want to use that mortgage as 
security at the insurance department, you could do so, if you have 
complied with the terms of the law in all its other provisions. 


106 


Q. Is there not an opening for collusion between the appraiser 
and the borrowers ? A. Yes; but it is the same in every case. 

Q. Well, have you ever known an instance of that kind? A. I 
have not; as I have stated, my experience has been very small. 

Q. In connection with loans in New Jersey, do you consider 
your loans in that State as good and secure as the loans that you 
make in this State ? A. I think they could be made so. 

Q. Well, are they such loans as you have got there ? A. Well, 1 
don’t know but the average is as good as those in this State ; yet I 
don’t know that it is; I think I should be inclined to say that the 
average was not as good; I (should) think that I should be inclined 
to say that the depreciation of property there is greater than it is in 
this State, from my limited knowledge of it. 

Q. Do you think it would be advisable for the Legislature to limit 
life insurance companies to investments within the State ? A. It is 
my impression, sir. 

Q. You think it would ? A. Yes, sir. 

Q. Will you assign the reason why you think it would be the best 
for the safety of the companies? A. Well, I think the companies 
could keep a closer knowledge of it if it is at home, and the cir¬ 
cumstances that surround this property that they loan upon, and the 
influences which surround it are known to them and there (arn’t) 
are not so many opportunities for any operations that would tend 
to loss. 

Q. Fraudulent operations, you mean, I suppose ? A. Yes, sir. 

Q. Can’t you supervise loans in States fifty miles from New York 
as well as you can in the remote parts of this State ? A. It could 
be done. 

Q. Well, don’t they do it ? A. I don’t think it is done. 

By the Chairman : 

Q. Are you aware that there are a large number of people doing 
business in New York that reside in New Jersey? A. Oh, yes ; a 
great many of them. 

Q. And people having mortgages in New Jersey ; don’t you con¬ 
sider that the interest is paid as promptly on New Jersey mortgages 
as it is on New York mortgages? A. I think it is about the same 
thing; there is a very large amount of life insurance money in New 
Jersey, I think, but it is an opinion of my own only; I think it 
would have been just as well if it had been confined to this State, 
and if the companies did not have that amount there. 

Q. I want to ask you this question in regard to policies in New 
Jersey, because, to my actual knowledge, there are a great many 
young clerks receiving small salaries who live in New Jersey be¬ 
cause they can live cheaper than in New York; those are the men 
who would be likely to have small policies on their lives, are they 
not? A. Yes, that is the case. 

By Mr. Moak : 

Q. It has been here intimated that, although the officers of these 


companies do not receive in so many words anything for the Use of 
the money, that money that belongs to these companies is sometimes 
used in stock speculation and the profit divided between them if its 
nse should be fortunate; I want to ask yon whether yon have, with¬ 
in five years, received directly or indirectly from any person or cor¬ 
poration whatever, any sum of money, as an inducement, directly or 
indirectly, for a loan deposit or the use of any money of any person 
bank, trust company or corporation ? A. I never received one cent. 

Q. Has any member of your family ? A. Never ; not one cent. 

Q. Have any of the officers or directors of your company, to your 
knowledge, or from any information you have ? A. Neither to my 
knowledge or to any information I have. 

Q. Here is another thing that I w.ant to ask you a question about; 
where, in your returns for 1875—how much cash did you say you 
had oil hand; A. One hundred and six thousand dollars. 

Q. For how long a time did you have that in the bank ? A. We 
keep that balance all the time ; we have it all the time. 

Q. In what company do you deposit it ? A. In the Shoe and 
Leather; and in the Broadway ; and we did have, up to the first of 
January, an account in the Park, but I do not think we have had 
any of late. 

Q. It is said these companies resort to this expedient when about 
to make a return on the first of January ; they draw on their agents 
for $100,000 or $200,000 one day, and get it credited to the compa¬ 
ny, and a few days afterwards take up their drafts; would that show 
in the cash ? A. Why, such an item would show in their cash-books; 
you cannot make such a transaction as that without showing it in 
the cash. 

Q. Well, it would show if you got at the truth of the matter, but 
it would not show to the State officers, would it? A. Well, if you 
want to show a balance it would have to be more than you could get 
from a bank on any such security as that. 

Q. Well has your company ever resorted to any such thing as 
that? A. Never to my knowledge. 

Q. Or information ? A. I never had any information about it. 

Q. It has never been done? A. Not to my knowledge. 

Q. But has it been done in any other company ? A. I don’t know 
anything about any other company. 

Q. There has never been an instance in your own company m 
which it was done? A. Never. 

Q. When you came to make returns did your returns show the 
amount on hand bonajidel A. Evei’y cent. 

Q. And there never has been a dollar made up by any act of that 
kind ? A. Never, sir. 

Q. Has your company ever loaned its securities to any other com¬ 
pany? A. Not a dollar that I have any knowledge or information 

of. 

Q. Not a dollar of its stocks or securities ? A. No, sir; not a 
dollar. 

Q. Has your company ever borrowed from any other company 
any stocks or securities ? A. Not a dollar. 


16 S 


Q. Have you ever borrowed them from any individuals? A. Hot 
a dollar. 

Q. Have any individuals borrowed from you? A. Yes, sir; on 
call loans. 

Q. Well, to what extent? A. We have about $65,000 worth of 
call loans. 

Q. Are those loans made to any member of your company ? A. 
Well, yes ; I think there is $20,000 or $30,000 of it; propably half 
of it is to people connected with the company. 

Q. On what sort of collateral ? A. On stock collaterals. 

Q. What stocks ? A. Bank stock principally ; soixie insurance 
stock, perhaps. 

Q. What insurance stock? A. Well, the Home and Continental 
Fire Insurance stocks, the Brooklyn, the Montauk, the Clinton, the 
Jefferson, the Pacific, and there are several more of them. 

Q. What amount of margin do you generally require ? A. Well, 
I think the loans have maigins probably forty per cent above the 
loan; there must be $100,000 collateral. 

By the Chairman : 

Q. Are those securities approved by the board of brokers ? A. 
Yes, sir. 

Q. And can be sold every day? A. Yes, sir, every one of them. 

By Mr. Floyd- Jones : 

Q. Who draws the checks? A. The checks are signed by the 
president and secretary. 

Q. The president and secretary then ; those two alone could draw 
money out of the bank any day ? A. Yes, sir. 

Q. Well, do any of your officers give any security for the manner 
in which they perform their duties ? Our by-laws require that our 
presidents should give $10,000 security ; I gave that security when I 
became president. 

Q. Was that given for the period in which you remained president, 
or was it given from year to year ? A. Yes, sir. 

Q. Well, which was it; was it renewed from year to year ? A. Yes, 
sir, it was renewed from year to year. 

Q. Do any other officer of it give any security ? A. Ho other 
officer. 

Q. Then $10,000 is all the security the company holds for the 
good faith of all its officers? A. Yes, sir; there is no one who has 
the handling of any money except the secretary ; that is, to any 
appreciable amount; of course the cashier has some, and has to have 
some, but he hands it over to the secretary two or three times a day. 

Q. Then why don’t you require the secretary to give security? 
A. He would have given security, but on account of his long and 
faithful service the board excused him from it. 

Q. Have any of the officers or directors of your company been 
connected in any way with any other life insurance company ? A I. 
don’t know that they have been. 


169 


Q. Directly or indirectly? A. Not to my knowledge. 

Q. Either as director, officer, agent or otherwise? A. Not to my 
knowledge; I know 1 am not, and the secretary I know is not to my 
knowledge; so far as I am aware, none of my directors are. 

Q. None of them are, so far as you know ? A. No, sir. 

Q. As to fire insurance companies ? A. I am a director in the 
Brewers and Maltsters’, and Mr. Sniffin, the secretary, is a director 
in the New York and Boston Company. 

Q Well, are there any other of your directors connected in any 
way with any other tire insurance company to your knowledge ? A. 
Yes, sir; Mr. Alexander Stubble is a director in the Montauk and 
Brooklyn ; he is a director, also, of the Brooklyn city horse railroad. 

Q. Can you name any others ? A. I don’t remember any others; 
I want to say that I presume that some of our directors are in some 
of the tire companies. 

Q. Well, you are a director in what company ? A. In the Brew¬ 
ers and Maltsters’. 

Q. Well, how much insurance of these collateral policies is there 
in that company that has been held by your company within the past 
two years? A. Well, I should think there must he from one to two 
hundred thousand thousand dollars. 

Q. Which company is Mr. Sniffiin a member of ? A. The New 
Y ork and Boston. 

Q. Well, how much in policies has your company had in collater¬ 
als of that company ? A. About fifteen or twenty thousand dollars. 

Q. You spoke of the Montauk, how much has your company in 
that? A. Twenty-five, thirty or forty thousand dollars, perhaps; I 
think we may have four or five policies in that. 

By Mr. Weiant : 

Q. I would like to ask whether any of the directors or officers are 
interested in banks ? A. I can answer the question by saying that 
neither any of the officers or directors are interested in either of the 
banks in which we keep an account? does that answer your question ; 
they are not interested in any of the banks in which we keep our 
accounts. 

By Mr. Moak : 

Q. I want to ask you a general question, because you have answered 
us very frankly; I want to ask you whether you would not deem it 
better to limit the officers of life insurance companies so that they 
could not be officers in any other insurance company ? A. I should 
say yes; to limit them to their own company, as far as life insurance 
is concerned. 

Q. Well, how as to its being a matter of good judgment as regards 
fire insurance ? A I should think it would he just as well to (they 
might all) do it. # 

Q. It would he just as well to limit them ? A. Yes, sir. 

Q. It might go on for years and be managed just as well, and still 
something might come up? A. Y es; and it seems proper that I 


should make some explanation in regard to the answer I gave in this 
case; in the first place an officer in a life insurance company has just 
as much as he can do to attend to his own business; he has no time 
to attend to any other business whatever, and for a man occupying 
the position of an officer in a life company to take the directorship 
of any other corporation, that is simply one in name, is an act that I 
deprecate; I have done it in the Brewers and Maltsters’, and I dep¬ 
recate it; I don’t think it should be done- 

Q. You mean to say it leaves a man more free and untrammeled 
to act solely for the company with which he is connected ? A, Yes, 
sir; life insurance is a matter that absorbs a man's whole nature, if 
he devotes himself to it. 

By Mr. Floyd-Jones. 

Q. Do you think it possible or advisable that the Legislature 
should pass a law making it rather obligatory for insurance companies 
to put a clause in their policies in reference to lapsed policies, or in 
other words, to change the law from what it is now ; as the matter 

stands now I understand it is discretionarv with the insurance com- 

«/ 

panics, and they very seldom, if ever, when a policy is lapsed, call it 
wiped out; they generally let it run on for a length of time, do they 
not ? A. Yes. 

Q. Do you think it is a good plan to pass a law saying it shall run 
for a certain length of time ? A. Do you mean something after tin* 
Massachusetts law. 

Q. Not exactly like that, but one for our State; for instance ; if I 
have paid for three years and I cease to pay, my policy lapses and 
that is the end of it ; now should there be a law saying that it should 
be extended for any length of time, and before that time expired I 
should be allowed to pay up, or is it better to leave it discretional 
with the company? A. I think there could be a law, but I am not 
prepared to suggest its terms, which would be judicious in its opera¬ 
tion both to the company and the insured; I think it could be 
framed. 

Q. Have you seen our law on the subject? A. No, sir. 

Q. Which is the best, a paid-up or a continued policy in force on 
the Massachusetts plan ? A. I think a paid-up policy is the best; 1 
consider that better than the Massachusetts plan. 

By Mr. Moak : 

Q. Take this case: when do you declare your dividends ? A. At 
the commencement of the year. 

Q. Suppose the 1st day of January, 1877, a dividend is declared 
upon a policy, the premium on which is not payable until the first 
day of the following July; s ipposethe dividend is not called for 
until that time, and on the first day of July the policy is forfeited, 
what becomes of the dividend? A. I don’t know* as anything be¬ 
comes of it; it has not been paid out, and it is not charged up. 

Q. Well, supposing the case that we have had of the man forty- 
five years of age, who has paid his premium for five years of $190 ? 


171 


A. Well you must understand that a dividend is payable on the next 
annual premium; that is the way the dividend is applied. 

Q. Well, that is what I am trying to get at; suppose that divi¬ 
dend is not payable until the next premium becomes due—suppose 
you declare him a dividend in the case I have suggested, and on the 
first day of January you declare him a dividend of, say forty dollars, 
his premium comes due on the first day of July ; on the first day of 
July he forfeits his policy absolutely and does not take out a paid- 
up policy or its present value, what becomes of that dividend? A. 
Nothing becomes of it. 

Q. I)oes it remain in the assets of the company ? A. Yes, of 
course it does ; for it was never taken out. 

Q. Suppose that day, before paying his premium, he had come 
and asked for his dividend, would you give it to him ? A. No, sir ; 
he would not be entitled to it, except on the payment of the pre¬ 
mium. 

Q. Then you don't give him the dividend until the policy is paid? 
A. No, sir. 

Q. And if the policy lapses, the dividend lapses? A. Yes, sir. 

Q. Then I understand you to say distinctly that the dividend is 
only payable in case the next premium is paid ? A That is it; sup¬ 
pose a party brings in a policy, with a clause in it that I have read— 
lie wants a paid-up policy—he moves into a different class of policy¬ 
holders, from a contributing member he becomes a non-eontributing 
member—his dividend is reduced in that case. 

Q. How ? A. The insurance value of a policy is that amount 
which will contribute to the death loss of the company ; if he has a 
$5,000 policy, and it is a continuing policy, we have, of course, the 
future value of the premiums to go upon ; that is part of the scheme 
of life insurance ; when he ceases to pay we fail to have that to go 
upon, and he becomes a non-contributing member, except so far as 
his reserve is good. 

Q. Let us suppose another case—supposing the case I have sup¬ 
posed all the way through—the first of July has come, and becomes 
to your office and he says “I want to take up a paid-up policy, and 
don’t want to contribute,” what becomes of the dividend, do you pay 
it to him or do(^ it lapse ? A. That is precisely the case I have 
stated; I say he goes from the class of contributing members to the 
class of non-contributing members, (verbally and) theoretically. 

Q. And so he does practically ? A. Yes , the dividend is (redu¬ 
ced) readjusted in this way ; if he was going to (take) get twenty- 
eight dollars on a continuing policy he would get about nineteen on 
a paid-up policy. 

Q. And the difference would go into the general fund? A. Yes, 
sir. 

Q. In your company are the dividends counted in the premium in¬ 
come until paid out ? A. No, sir. 

Q. They do not go into the premium income at all ? A. No, sir. 

Q. About what is the annual expense of advertising in your com¬ 
pany? A. Well, I don’t know; it is down there in 1875, and it is 
very much reduced in 1876; in 1875 it was $16,832,30. 


172 


Q. Let me ask you if tlaat includes advertising in newspapers, cir¬ 
culars, pamphlets, and everything? A. It includes all manner of 
advertising. 

Q. Do you know if in your company there has been anything paid 
or received by any officer of the company that was charged ostensi¬ 
bly for advertising? A. No, sir. 

Q. For instance, say a bill was rendered for $10,000, and $7,000 
was for services and $3,000 would be paid somebody else; have you 
ever known an instance of that sort? A. No, sir, not a cent. 

Q. In no case of which you have knowledge or information ? A. 
No, sir, none whatever. 

Q. Is there such an institution in the city of New York known as 
the Chamber of Life Insurance ? A. Yes, sir. 

Q. Are you a member of it ? A. I am, or the company is. 

Q. You are? A. Yes, sir. 

Q. About when was it organized? A. Well, it was organized in 

1873. 

Q. Just about the time of its being organized, was there a pretty 
active light, or that is scarcely the proper word to use—was there a 
pretty active difficulty between the Equitable and the Mutual ? A. 
There was a pretty lively disagreement. 

Q. Was that organized in consequence or partly in consequence of 
the disagreement ? A. I don’t know, I was not a member of it. 

Q. Was it organized before or after the trouble ? A. About the 
time of the trouble. 

Q. About how soon after it was organized, did you or your com¬ 
pany become a member of it ? A. I guess it is about two years since 
we joined it. 

Q. What officers has it ? A. It has a president. 

Q. Who is its president ? A. I think Mr. S. C. Hewey—he is 
the president of the Penn Mutual Life Insurance Company of Phil¬ 
adelphia. 

Q. What other officers besides a president has it ? A. I think it 
has a vice-president, but I don’t remember who he is; it has a secre¬ 
tary. 

Q. Who is he ? A. Charlton T. Lewis. 

Q. Is he connected with any life insurance company ? A. No, 
sir. 

Q. Has it any managers or directors ? A. Not that I know of—- 
it has trustees. 

Q. It has trustees ? A. Yes, sir. 

Q. Do you know how many ? A. Seven or eight, I think, I don’t 
know. 

Q. Are you one of them ? A. No, sir. 

Q. AWiat is the object of that institution, as far as you (know^) under¬ 
stand it ? A. Well, the object is to promote the growth of sound 
insurance, I think, as I understand it. 

Q. How many insurance companies in New York are members of 
it; or I will ask you this first: are its members considered as indi¬ 
viduals or representatives of insurance companies? A. It is the 
companies that are the members. 


173 


Q. And they are represented by the officers of the companies'? 
A. Yes, sir. 

By the Chairman : 

Q. Just the same as the clearing-house of a bank? A. Yes, sir. 

By Mr. Moak: 

Q. How many of the companies are members? A. They are all 
members except the Manhattan and the Washington, I think. 

Q. Are the officers paid a salary ? A. That I don’t know ; I have 
no knowledge of the working of the institution. 

Q. Does your company pay any thing toward the expenses of the 
working of the institution ? A. Yes, sir. 

Q. How much a year? A. I can’t tell you how much it is 
exactly. 

Q. Well, about how much? A. Well, I should think about 

$ 1 , 000 . 

Q. Do you know for what purpose it is used, or have you any 
information ? A. I have not. 

Q. Have you any information as to the purpose for which the 
fund is contributed ? A. I have not, except in a general way. 

Q. Well, give us your general information ? A. Well, my general 
information is that there is some sort of an arrangement there by 
which they watch legislation that is obnoxious. 

Q. Whose business do you understand it to be to watch obnoxious 
legislation? A. You have got me there; I don’t know any thing 
about it. 

Q. You don’t know any thing about it? A. No, sir; I never go 
there. 

Q. You understand this fund is contributed ior the purpose of 
watching what is called obnoxious legislation ? A. That is one of 
the objects of it. 

Q. Ilave you not been present when the subject (question) of 
obnoxious legislation in Massachusetts was under discussion ? No, 
sir; I think there is a variety of things it is for. 

Q. Well, take, for instance, this case—do you know whether one 
of its objects is to obtain control to a certain extent of the press ? A. 
That I know nothing about. 

Q. Have you hoard it is? A. No, sir; I don’t believe it is. 

Q. Is the Chamber of Life Insurance represented by any journal ? 
A. No, sir. 

Q. Does it publish one? A. No, sir. 

Q. Obnoxious legislation that you speak of; do they attempt to 
control it in one State or in all States? A. All over. 

Q. Do you go there as a member or as an officer of your company; 
are you regarded as a member, entitled to act, to vote, to speak in 
its deliberations ? A. Yes, sir. 

Q. Are its meetings private or public ? A. Private. 

Q. Secret exclusively ? A. I suppose so ; I always thought so. 

Q. They have always been secret, so far as you know? A. Yes, 
sir. 


174 


Q. Are not their proceedings regarded as strictly secret ? A. I 
never knew of any one being there but a member. 

Q. Are not its members under an obligation to keep its proceed¬ 
ings secret except from a member of the chamber ? A. I think not, 
except when we are specially requested to do so; something might 
be talked about that we might want to be secret, but there is no 
general rule. 

Q. Does each company contribute its support? A. Yes, sir. 

Q. Does each company contribute to the fund a lump sum, or how 
is the contribution arrived at ? A. The contribution is in the ratio 
of the assets. 

Q. And in the ratio of assets, about where does your company 
stand in the ratio of companies in the city of New York? A. Well, 
the Mutual Life lias about $80,000,000; we stand about fifth. 

Q. Are (Was) companies outside of the State of New York allowed 
to be members? A. Yes, sir. 

Q. Any where in the Union? A. Yes, sir; or in Canada. 

Q. About how many companies are members of the association, 
as you understand it ? A. I think about eighteen or twenty; I 
should think so; somewhere from fifteen to twenty. 

Q. Does the secretary have any other business except acting as 
secretary ? A. Not that I know of; I don’t know of any. 

Q. Do you know of his attending at various places in regard to 
obnoxious legislation ? A. I only know of his being in one place. 

Q. Where was that ? A. In Canada. 

Q. When was that ? A. Last year. 

Q. What obnoxious legislation was going on there that it was 
necessary to attend to it? A. We do not do business in Canada, 
and, therefore, I was not interested in it particularly, but I heard it 
was (burdened) something to do with heavy taxation on business; 
when I speak about obnoxious legislation I mean to be understood 
as (to) alluding to the principle of excessive taxation. 

By Mr. Weiant: 

Q. Have you any knowledge or information as to whether this 
Chamber of Life Insurance has taken any action in regard to obnox¬ 
ious legislation in this State ? A. I have not any. 

Q. No information on that subject at all ? A. No information on 
that subject at all. 

Q. Do you know whether this association employs any attorneys 
or lawyers? A. I only know from information. 

Q. Well, state from information ? A. Yes, they do. 

Q. Well, who are they? A. Foster & Thompson are the counsel. 

Q. Of New York city? A. Yes, sir. 

Q. Any one else? A. I don’t know of any one else. 

Q. When did you last attend a meeting of the Chamber of Life 
Insurance ? A. I attended one several months ago; it was at the 
annual election. 

Q. Not since the first of January? A. Oh, no; it was several 
months ago. 

Adjourned until Tuesday, March 27, 1877, at 9 o’clock a. m. 


175 


AFTERNOON SESSION. 

Thursday, March 22, 1877. 

Morris Franklin sworn : 

/ 

Examined by Mr. Moak : 

Mr Franklin —-Mr. Chairman, perhaps I may be permitted to say, 
before being examined, that at the time I received Mr. Bixby’s reso¬ 
lution we were engaged with all the committees of the corporation 
in an investigation of our affairs prior to our annual statement. The 
time passed that we were to answer the resolution, and I would say that 
we were unusually busy and our not answering it was an oversight 
and was not intended as any discourtesy to Mr. Bixby or the com¬ 
mittee. I have prepared a statement which I shall read to the com¬ 
mittee. The statement is as follows: 

Detailed Statement 

Of salaries and all other fees, compensation or donation paid to 
officers, medical examiners, attorneys , counselors, and all other 
employes of the New York Life Insurance Company, during 
the year 1876. 

Amount of salary paid to president during the year - $25,000 00 

Amount of all other fees, compensation or donation, if 
any, paid president during the year - - 6,250 00 

Total - - - - $31,250 00 


The duties of vice-president, secretary and actuary, 
during the year 1876, was performed by one person, 
and the amount paid to him for salary during the 
vear ------ $25,000 00 

Bonus - ----- 6,250 00 


Total - $31,250 00 


Amount of salary paid to medical examiners during the 
year, being three in number; these three being the 
only ones of several hundred who were paid a salary, $11,000 00 
Amount of all other fees, compensation or donation, if 
any, paid medical examiners during the year - 30,491 03 

Total - $41 ,493 03 

Amount of salaries paid to attorneys and counselors 
during the year - - - - -_ None . 














176 


Amount of all other fees, compensation or donation, if 
any, paid attorneys and counselors during the year, 
being over fifty in number - $21,376 75 

Average amount of salary paid to all other clerks and 
employes of the company during the year, $1,271,50, 
being 71 in number - - $95,364 70 


Amount of all other fees, compensation or donation, if 
any, paid to all other clerks and employes of the 
company during the year - $9,795 08 


STATE OF NEW YORK, ) : 

County of , f 

Morris Franklin, president, and William H. Beers, vice-president 
and actuary of the New York Life Insurance Company, being duly 
sworn, depose and say, and each for himself says, that they are the 
above described officers of said company, and that the foregoing de¬ 
tailed statement is a full and correct exhibit of the amount paid in 
salaries, fees or compensation or donation to the president and vice- 
presidents, secretaries, actuaries, medical examiners, attorneys, coun¬ 
selors, clerks and other employes of this company during the year 
ending on the 31st day of December, 1876. 

MORRIS FRANKLIN. 
WM. H. BEERS, 

Vice-President and Actuary. 


Subscribed and sworn before me, j 
this 19th day of March, 1877. \ 

Wm. Menzies Adams. 


By Mr. Mgak : 

Q. Are you the president of the New York Life Insurance Com¬ 
pany ? A. I am. 

Q. And this paper is sworn to by you ? A. By myself and the 
vice-president, being the only two officers of the company. 

Q. You don’t have a secretary? A. No, sir; we have but two 
executive officers. 

Q. Is that all the statement you have to present ? A. Yes, sir. 

Q. Y our first statement is that of the president’s salary of twenty- 
five thousand (25,000) dollars—is that the regular salary of the 
president ( A. It has been for the last few years. 

Q. For how many years? A. For the past four (4) or five (5) years. 

Q. Previous to that time what was the salary—greater or less ? A. 
Less ; about ten thousand (10,000), if my memory serves me. 

Q. Up to about five (5) or six (6) years ago ? A. Yes, sir. 

Q. And then it was increased to twenty-five thousand (25,000) 
dollars? A. Yes, sir. 








177 


Q. And has remained at that ever since? A. Yes, sir. 

Q. You speak of the compensation paid the president beyond that, 
six thousand two hundred and fifty dollars ($6,250); how is that ar¬ 
rived at ? A. By virtue of a resolution passed by the board in con¬ 
sequence of the (receipts), situation and business of the company 
being very prosperous during the year ; it is a bonus. 

Q. At the end of the year a bonus was donated to the president? 
A. Y es, sir ; during the past few years. 

Q. And in 1876 the bonus was six thousand two hundred and fifty 
(6,250) dollars? A. Yes, sir; twenty-five (25) per cent of the sal¬ 
ary. 

Q. That was not in pursuance of any agreement? A. No; vol¬ 
untary on the part of the board. 

Q. Was that the whole sum the president received from any 
source, and all sources connected with the business of the company ? 
A. That is all. 

Q. During that year did the president have any other business than 
this ? A. No, sir. 

Q. Was he in any other way connected with any other corpora¬ 
tion, fire, marine, or any other business? A. I am director in three 
(3) fire insurance companies and director of two (2) banks. 

Q. What fire insurance companies ? A. The Arctic, the Empire 
Fire—it should be two (2); then there is the Central Bank and the 
Flushing and Long Island Bank. 

Q. You were director in those banks also? A. Yes, sir. 

Q. What salary did you receive from the insurance companies? 
A. Nothing whatever. 

Q. No compensation of any kind ? A. No, except at the quarter¬ 
ly meetings of the board we are paid five dollars ($5) apiece. 

Q. Well, now, as to the banks? A. None whatever, except at the 
Central Bank, when at the half-yearly meetings we receive five (5) 
dollars each. 

Q. Your vice-president received the same compensation as the 
president ? A. The same, exactly. 

Q. Both in regular salary and extra compensation ? A. Yes, sir. 

Q. Was he connected with any other business or corporation? A. 
None whatever, sir, except I believe he is a director in the Farragut 
Fire Insurance Company. 

Q. Who is the vice-president ? A. William H. Beers. 

Q. He acts also as secretary and actuary ? A. Yes, sir. 

Q. Does he receive any additional compensation for services ren¬ 
dered in those capacities ? A. None whatever. 

Q. His large salary is to compensate him for working in the three 
(3) positions ? A. Yes, sir. 

Q. Well, now, you have three medical examiners at the home 
office in the city of New York? A. Yes, sir. 

Q. And they are paid in the aggregate eleven thousand (11,000) 
dollars? A. Yes, sir. 

Q. How much is the largest sum you pay to either of them ? A. 
Five thousand (5000) dollars salary; I think so. 

Q. And the others receive about three thousand (3,000) each ? 

12 


A. Yes, sir, between three (3) and four (4) thousand each. 

Q. You give the amount of all other fees or compensation given 
to medical examiners at thirty thousand four hundred and ninety- 
one dollars and three cents ($30,491,03); that includes medical ex¬ 
aminers scattered through the United States? A. Yes, sir. 

Q. What is the average paid for medical examinations ? A. The 
average is four (4) dollars, but we sometimes pay as much as five 
(5) dollars; five dollars is the maximum. 

By Mr. Wei ant : 

Q. Is that determined by the amount of the policy? A. No ; it 
is determined by the contract we make with the examiner. 

Q. Do you make a specific agreement for each examination ? A. 
Yes, sir; per capita. 

By the Chairman : 

Q. The medical examination fee has nothing to do with the 
amount of policy ? A. No, sir. 

By Mr. Moak : 

Q. You say you have no attorneys or counselors paid a salary? A. 
No, sir; we have not any. 

Q. You have no regular counsel? A. Yes, sir. 

Q. You spoke of the amounts paid to different attorneys and 
•counselors as twenty-one thousand three hundred and seventy-six 
dollars and seventy-five cents ($21,376,75) ; what was the largest 
sum paid to either counsel ? A. I think the largest sum paid to either 
counsel was paid for an argument in the United States courts at 
Washington ; it was paid to Mr. Carpenter ; it was twenty-five hun¬ 
dred (2,500) dollars. 

Q. Was that one of the southern claims? A. Yes, sir; I think 
there were two (2) counsel in that case. 

Q. And that was the largest amount paid? A. Yes, sir. 

Q. Well, now give us the next largest? A. I suppose it was from 
that down to fifty (50) dollars. 

Q. Have you not a counsel you are in the habit of going to for 
advice when you need it ? A. Yes, sir. 

Q. How much do you pay him ? A. I think we paid him last 
year twenty-five hundred (2,500) dollars. 

Q. And that is the only amount you pay to any one person in New 
York ? A. Yes, sir. 

Q. Who is that ? A. It is Fullerton, Knox & Crosby. 

Q. Have you any other counsel ? None except the attorneys who 
examines the titles. 

Q. Who pays him ? A. The borrower. 

Q. Do you know what his receipts were ? A. No, sir; I never 
inquired. 

Q. You have no means of knowing ? A. I have not, sir. 

Q. The persons who pay the counsel are scattered all over the 
world, I suppose ? A. No, sir; they are right at home. 


179 




By Mr. W eiant : 

Q. Will you give the names of the attorneys employed ? A. It 
is impossible for me to tell you ; Fullerton, Knox & Crosby are the 
only ones employed in the city of New York. 

Q. Have you paid any others? A. No, sir; not in New York 
eity. 

Q. I mean elsewhere? A. I cannot tell the names of any others 
elsewhere. 

Q. 7 on cannot give the names of any attorneys? A. No, sir; 
they are entire strangers to me, personally. 

Q. Cannot yon give the names of them? A. No, sir, I cannot. 

Q. Do you know attorneys have rendered services during the 
year ? A. I have no knowledge; I know by representations made 
by agents. 

Q. Where? A. In localities where the agents are employed. 

Q. Do you authorize them to employ counsel to represent you ? 
A. We do, sometimes. 

Q. Have you? A. Yes, sir. 

Q. And you cannot state the names? A. No, sir. 

Q. Has your company employed any other counsel than Fullerton, 
Knox & Crosby? A. No, sir; not in New York. 

Q. And paid no other firm a dollar? A. No, sir; not to my 
recollection. 

Q. Have you had any contested cases in New York during the 
past year ? A. I think not; no, sir; not any. 

By Mr. Moak : 

Q. At the commencement of the year 1876, how many policies 
have you had in existence; or let me ask you, in the first place, is 
your company a stock company, or mutual ? A. Mutual, strictly. 

Q. Now, give us the number of policies you had in existence at 
the commencement of the year 1876 ? A. Forty-four thousand six 
hundred and sixty-one (44,661) policies on the 1st day of January, 
1876, were in existence. 

Q. How much did they insure the persons who held them? A. 
One hundred and twenty-six million, one hundred and thirty-two 
thousand, one hundred and nineteen dollars ($126,132,119). 

Q. How many policies did you issue during 1876? A. Six thou¬ 
sand five hundred fourteen (6,514), insuring twenty million, sixty- 
two thousand one hundred and eleven dollars ($20,062,111). 

Q. How many policies lapsed, should you say, during the year, so 
as to cover all the policies that expired during the year? A. Well, 
I suppose, in round numbers, from three (3) to four thousand (4,000); 
I cannot tell, exactly. 

Q. In that time do you include all that expired by death, or that 
were allowed to expire in consequence of non-payment of premium ? 
A. Yes, sir. 

Q. How many lapsed by death of the insurer, or about how many ? 
A. Well, probably about three hundred, or three hundred and fifty 
(300 or 350). 


180 


Q. And how much was paid to parties insured in these cases, or 
about how much ? A. In case of lapse, do you mean ? 

Q. Ho, in cases of death, I mean ? A. One million five hun¬ 
dred and forty-seven thousand six hundred and forty-eight dollars 
($1,547,648). 

Q. Were those all paid during the year? A. Yes, sir. 

Q. How many claims, if any, made during the year against your 
company, were contested, or rather were denied ? A. Well, I don't 
know; there were over five (5), and I think the most of them were 
in reference to southern policies. 

Q. They were in reference to southern policies, to which reference 
has been made? A. Yes. 

Q. How many were contested besides southern policies, to your 
recollection ? A. Probably five (5) or six (6); may be ten (10). 

Q. Canyon mention any of them particularly? A. I have not 
any of them in my mind ; I don't recollect names at all . 

By Mr. Weiant: 

Q. As president of the company you cannot specify any contested 
cases ? A. I cannot mention any. 

Q. Don't you consider that part of your duty ? A. I have refer¬ 
ence to them in my books at home; I can’t tell here; I donH 
carry them in my mind. 

Q. You cannot recollect any of them? A. Ho, sir. 

i 

By Mr Moak : 

Q. You state you could not state any of the claims that were con¬ 
tested ? A. I don’t recollect the cases now; many of them have 
been cases of long standing; have been on the calendars from time 
to time and have not been reached. 

Q. You say two hundred and fifty (250) lapsed by death, while 
three (3) or four (4) thousand lapsed in all? A. Yes, sir. 

Q. The balance lapsed by reason of non-payment of premiums by 
the insured ? A. That is so, sir. 

Q. How much, in amount , did these policies represent? A. Well, 
I suppose they would represent three thousand dollars [$3,000] each • 
from three fliousand [3,000] to two thousand five hundred [2,500] 
each. 

Q. Each? A. Yes, sir, that is about the amount. 

Q. Were any of those reinstated subsequently? A. I cannot say: 
here are quite a number of them have been restored. 

Q. How many, and representing in amount how much ? A. Say 
one hundred and fifty [150] at a rough estimate, each one averaging 
say a three thousand dollar [$3,000] policy ; that is a rough estimate, 
sir. 

Q. The balance of them have not been in any way reinstated ? 
A. Ho, sir. 

Q. And aie absolutely, so far as the policy is concerned, none 2 
A. Yes, sir. 6 

Q. Did your company issue any paid-up policy during the year to 


181 


parties who surrendered their policies ? A. Yes, sir, we have issued 
quite a number. 

Q. To what extent? A. Well, I suppose we would have three or 
four (3 or -1) a day; three (3) a day probably. 

Q. During the'year ? A. Yes, sir. 

Q. How many during the year ? A. Say nine hundred (900); 
it is a mere estimate. 

Q. How much did they amount to in the original insurance ? A. 
About the same average. 

Q. Three thousand (3,000), or two thousand live hundred dollars ? 
A. Yes, sir. 

Q. How much were the paid-up policies, on an average, gener- 
• ^■. Well, I suppose they would average perhaps five or six 

per cent of the original insurance. 

Q. And about what was the average of the time they had run ? 
A. Y ell, I don’t suppose the average would be more than four (4) 
or live (5) years. 

Q. Do you have any person engaged in the procuring of surren¬ 
dered policies? A. We have, sir; for several years past we have 
become satisfied that southern risks were not desirable risks, and we 
have an agent engaged in endeavoring to buy up those policies at a 
fair average value. 

Q. In the South ? A. Yes, sir. 

Q. South of what line? A. South of Mason and Dixon’s line; 
our experience tells us that the southern people mature earlier and 
die earlier than people north of that line, and are not desirable risks. 

Q. Well, where do those persons live whose policies you are try¬ 
ing to buy up ? A. All of the Southern States, in fact. 

Q. What portion of them have been bought north of Mason and 
Dixon’s line ? A. We have not made any effort to get any north of 
that line; on the contrary we are desirous that they should continue. 

Q. What proportion of your policies are south of Mason and Dix¬ 
on’s ? A. About ten (10) per cent. 

Q. Hot to exceed that ? A. No ; it is comparatively small. 

Q. What proportion now, after having obtained the number you 
speak of; what proportion now are south of Mason and Dixon’s 
line? A. I should think probably five (5) per cent; five (5) or six 
(6) per cent, I should think. 

Q. Does your company receive notes for part of the premiums? 
A. We did originally, but have not within the past ten [10] years. 

Q. How much in notes did your company hold at the commence¬ 
ment of 1876 ? A. About seven hundred thousand dollars [$700,000] 
worth. 

Q. How much did it amount to at the end of 1876 ? A. About 
the same amount, except what was deducted in the payment of 
losses. 


Q. How much would that be ? A. I cannot tell you. 

Q. Besides those notes, what assets had your company at the com¬ 
mencement of 1876? A. Only the assets allowed by the laws of 
the State of New York. 

Q. I am speaking of amount? A. On January 1, 1876, we had 


182 


thirty million, one hundred and sixty-six thousand, nine hundred and 
two dollars and sixty-nine cents [$30,166,902.69]. 

Q. The assets in aggregate? A. Yes, sir. 

Q. Well, now, of what was that composed? A. It was composed 
of cash in trust companies and banks; one million four hundred and 
twenty-seven thousand, nine hundred and thirty-three dollars and 
eighteen cents [$1,427,933.18] in United States, New York city and 
other stocks; nine million, seven hundred and thirty thousand, five 
hundred and thirty-nine dollars and twenty-one cents [$9,730,539,21] 
real estate; two million, five hundred and forty-one thousand, five 
hundred and seventy-six dollars [$2,541,576] loans on existing policies; 
the notes of which you were speaking, seven hundred and eighty-one 
thousand, five hundred and eiglity-five dollars and thirty-nine cents 
[$781,585.39); quarterly and semi-annual premiums on existing 
policies, due subsequently to January, four hundred and thirty-two 
thousand, six hundred and ninety-five dollars and forty cents 
[$432,695.40]; premiums on existing policies, in course of trans¬ 
mission, one hundred and twenty-five thousand and twenty-seven 
dollars and fifteen cents [$125,027.15] ; agents’ balance due the com¬ 
pany, thirty-six thousand, one hundred and fifty four dollars and 
nineteen cents [$36,154.19] ; accrued interest on investments, three 
hundred thousand, five hundred and fifty-eight dollars and sixty 
eight cents [$300,558.68] ; bonds and mortgages, seventeen million, 
three hundred and fifty-four thousand, eight hundred and thirty 
seven dollars and eighty four cents [$17,354,837.84]. 

Q. The cash was in the bank, to the credit of the company, I sup- 
pose? A, Yes, sir. 

Q. And this nine million, seven hundred and thirty thousand, five 
hundred and thirty-nine dollars and twenty-one cents [$9,730,539.21], 
you say consists of United States bonds and State stocks, and what 
other kinds ? A. Bonds of cities and towns. 

Q. In the State of New York? A. Yes, sir ; all in the State of 
New York. 

Q. Of what 
poration ? A. 
majority of tin 

By Mr. W eiant : 

Q. Have you any funds invested in other stocks? A. No, sir, 
not to my recollection. 

Q. Have you any in railroad stocks ? A. No, sir; not a share. 

Q. In the report last year of your company it reports as assets 
New York Central and Hudson Biver Bailroad bonds? Yes, they 
are bonds, but not stock. 

Q. You hold some Merchants’ Bank stock ? A. Ye», we hold 
some bank stock. 

Q. Give the banks ? A. I think we hold some of the Metropoli¬ 
tan Bank, the Merchants’ Bank, the Bank of America, The Bank 
of the Bepublic—we hold three thousand [3,000] there, and the 
American Exchange Bank, I think we hold some there. 


did the principal of the bonds consist—of what cor- 
New York, and Brooklyn city bonds, the large 


183 


Q. Do you hold some Richmond city bonds? A. Yes; we are 
obliged to hold some there for the purpose of complying: with the 
laws ot V lrgmia. 

Q. Virginia State bonds are they ? A. Yes, sir. 

Q. And so with Georgia and Alabama bonds? A. Yes, sir. 

Q. Can you specify the amount of stock your company holds in 
different banks ? A. No, sir, I cannot. 

Q. Has there been any change since the report was made in 1875 ? 
A. 1 have no knowledge of any change being made in stock. 

Q. These are stated in the annual report of 1875? A. Yes, sir. 

Q. Those stocks are on pages from tifty-five [55] to fifty-nine [50] 
in the report; those stocks were the same in 1876 as they were in 
1875, so far as your recollection goes ? A. I think they were; there 
has been no change that I know r of. 

Q. The real estate is two million live hundred and forty-one 
thousand five hundred seventy-six dollars [$2,541,576]; of what 
» does that consist ? A. It consists of the building w r e occupy, and 
property bought in under foreclosure. 

Q. How much do you estimate the building you occupy? A. 
About $1,500,000. 

Q. Where is it ? A. On the corner of Broadway and Leonard 
street; it is a large marble building. 

Q. Was it erected by your company ? A. It was, sir. 

Q. When ? A. About six [6] or seven [7] years ago. 

Q. How much was the cost of it, including the land on which it 
was situated ? A. I think it was about that sum ; I think that is the 
estimate. 

Q. That would leave, then, about how much ? A. About seven 
| 7] or eight hundred thousand [800,000] dollars. 

Q. What other real estate do you own? A. We own some that 
we bought under foreclosure. 

Q. Then you hold real estate that you value at about $1,000,000 
that you bought under foreclosures? A. Yes, sir. 

Q. Where is that real estate located ? A. Principally in New 
York; we have some few parcels in Elizabeth, New Jersey. 

Q. When were those mortgages foreclosed ? A. Within the last 
year sir. 

Q. How many in number were they? A. I don’t know; perhaps 
twenty, twenty-five or thirty; I cannot tell. 

Q. Then that must be high-priced real estate ? A. That was so; 
they were large dwelling-houses, principally. 

Q. How much would they average, the mortgages foreclosed, 
principally ? A. Perhaps $10,000; we have some $25,000 and 
$30,000. 

Q. This real estate was bought up in the name of the company ? 
A. Yes, sir. 

Q. How much was it bought for relative to the amount of the 
mortgage? A. About the amount of the principal and interest and 
cost. 

Q. In each case ? A. Yes, sir. 


184 


Q. For less or more? A. A little less, as near as we can make a 
calculation, principal, interest and cost. 

Q. Your instructions were to buy in if sold for less than the mort¬ 
gage? A. Yes, sir. 

Q. Who were they given to ? A. To the attorneys that had it in 
charge. 

Q. Who is the attorney ? A. Henry A. Bogart is the attorney 
for examining the titles and makes the foreclosures. 

Q. How much was paid to him for examining the title and fore¬ 
closure? A. We don’t pay him any thing. 

By Mr. Moak : 

Q. You pay him for foreclosing? A. Yes, sir. 

Q. What did you pay ? A. The taxable cost. 

Q. How much did that amount to ? A. That I can’t tell. 

Q. Has all your real estate been rented? A. Substantially all 
has been. 

Q. About what per cent has it brought in, in rent? A. Well, I 
think it has brought in, on an average, five to six per cent, net. 

Q. That is exclusive of the taxes and assessment? A. Yes, sir. 

Q. Is it all real estate upon which there are buildings? A. I 
believe without an exception; yes, sir. 

Q. Are you familiar with the value of real estate in Hew York ? 
A. I am not personally. 

Q. What amount was loaned on the various mortgages in propor¬ 
tion to the appraisal? A. Forty per cent of the appraisal. 

Q. Hot to exceed that? A. That has been the extent. 

Q. Was the real estate all appraised in the usual way at the time 
you received the mortgiges? A. Yes, sir. 

Q. Were any of the mortgages given by the officers of the com¬ 
pany, or by persons connected in any way with the company ? A. 
Hot any. 

Q. Who are the appraisers ? A. The finance committee appraised 
them personally, all the parcels in Hew York. 

Q. Who are the finance committee ? A. Our finance committee 
consists of William Bowles, W. H. Appleton, H. B. Claflin and 
James M. Furman. 

Q. Those mortgages you took were secured collaterally by fire 
insurance policies? A. Yes, sir; every one of them. 

Q. In what companies? A. In various companies. 

Q. Give the companies in which the largest are? A. I suppose 
the Farragut has the largest, because they occupied part of our 
building; there are fifty of them. 

Q. Well, who next? A. I can’t tell. 

Q. You spoke of some in which you were director—is part of 
those policies in those companies? A. I don’t think we have any 
policies in those. 

Q. And have not had ? A. And have not had any to my knowl¬ 
edge; we may have one or two in the Empire City, running there, 
but I do not recollect. 


185 


Q. Have you ever made it a condition in taking a loan, that the 
person borrowing should take a policy of tire insurance in either of 
those companies ? We never have done so ; we always ignore it en¬ 
tirely. 

Q. As to the balance of the real estate on bond and mortgage, 
seventeen million and a little over ; where is that located? Eighty 
per cent of it is in Hew York. 

Q. Where is the balance of it ? A. In Hew Jersey, within a 
radius of fifty miles from the city hall, in Hew York. 

By the Chairman : 

Q. The law requires that, does it not? A. Yes, the law requires 
that. 


By Mr. Moak : 

Q. How much have you loaned upon farm lands in this State ? 
A. I can’t say ; we won’t loan over thirty per cent on the farm lands. 

Q. Well, how much in amount? A. I cannot tell you that. 

Q. Has all the real estate upon which bonds and mortgages exist 
been appraised in the usual way ? A. Yes, sir, it has ; all of it. 

Q. In any one case, has a loan to exceed forty per cent of the ap¬ 
praised value been made? A. Ho, sir. 

Q. How much of it has been taken within say two years ? A. It 
is utterly impossible for me to say; last year we had very little on 
bond and mortgage, because good bonds and mortgages are very 
scarce. 

Q. Very little? A. Very little. 

Q. Most of them were loaned on property that was appraised prior 
to the present crisis, and depression in real estate? A. Yes, sir. 

Q. Has you company reinsured any other company, or any risk 
in any company? A. Ho, sir ; we have not. 

Q. Have you reinsured any of your risks in any other company ? 
A. We have some where the amount applied for has been larger 
than we have cared to take. 

Q. To what amount ? A. Perhaps $150,000 ; not more; it is 
generally understood that we do not take over $20,000. 

Q. What will the policies average ? A. I suppose the policies will 
average about $10,000 each. 

Q. Then that will be about fifteen policies? A. Yes ; it is a small 
.amount. 

Q. In what companies do you reinsure? A. In the Union Mutual 
of Boston; I think they are all Boston companies ; I forget the titles 
of them. 

Q. Are you sure of their all being Boston companies ? A. They 
are all Boston companies, I think; we have nothing in Hew York, 
I think. 

Q. Do you do that without the consent of the policyholders ? A. 
We issue our policies for the whole, and then reinsure the risk ; for 
example, if a person places, say $40,000 with us, we issue our policy 
for $40,000, and then reinsure $20,000. 


186 


Q. How many agents had yon in the Southern States, engaged in 
procuring the surrender of policies ? A. Only one, sir. 

Q. How much was paid him; was he paid a per centage on the 
policies surrendered, or a salary ? A. My impression is he has $3,000 
a year and expenses. 

Q. He has a salary, then? A Yes, sir. 

Q. And this did not exceed $3,000 a year and expenses? A. That 
is as near as I can recollect. 

Q. Has your company ever borrowed any money, stocks, or secu¬ 
rities from any other company or any other person ? A. Ho, sir ; 
we never had occasion to. 

Q. Have you loaned any of your money, stocks, bonds or securi¬ 
ties, to any other company or person ? A. Ho, sir ; never. 

Q. Have you borrowed any from any banks? A. Ho, sir. 

By Mr. Moody : 

Q. Have you ever had an examination by the department? A. 
Ho, sir ; not a thorough examination ; I have been there over twenty- 
five } r ears, and I don’t think we ever had an examination. 

By the Chairman : 

Q. Had you not had a partial examination ? A. I do not recol¬ 
lect a visit from the superintendent, except a casual visit. 

Q. The department lias not been in existence as long as that? A. 
Well, I say during the time I have been connected with the com¬ 
pany, we have not had an examination. 

By Mr. Moody : 

Q. Have you any of the Delaware and Hudson Canal Company’s 
bonds ? A. I think we have ; it appears in the report if we have. 

Q. With the depreciation, of course? A. Yes, sir. 

By Mr. Moak : 

Q. You say you have the same bonds and stocks now that are 
stated in the report ? A. That is so. 

Q. How long have you had those southern state bonds ? A. We 
had those prior to the war, sir ; ever since we were in the habit of 
doing business there; we have never invested in those except on 
compulsion. 

By the Chairman : 

Q. And you have only taken the amount required by the law r s of 
the States ? A. That is all, sir; nothing beyond that. 

By Mr. Moody : 

The companies doing business there are required to have State 
bonds, are they not ? A. To a certain amount, yes, sir. 

By Mr. Moak : 

Q. Each State requires the companies to invest in it $100,000 of 
its bonds, does it not? A. Yes, sir. 


187 


By Mr. Moody : 

Q. Well, the market value of those bonds, how do you arrive at 
that ? A. By the quotations of the day. 

Q. Y ou arrive at that at the time you make the statement ? A. 
At the time we make the annual statement, on the thirty-first of 
December. 

By Mr. Floyd-Jones. 

Q. Have you any Queens county bonds ? A. I don’t know 
whether we have or not; we have some Flushing water bonds. 

By Mr. W eiant : 

Q. How long have you been president of the company ? A. Over 
twenty-five years. 

Q. Going back to 1867, can you give the salaries you have received 
from that time, and the amounts paid ? A. I should think it would 
be from ten to $12,000; not to exceed $15,000. 

Q. The president’s salary ? A. Yes, sir. 

Q. There was an allowance besides that during those years, was 
there not ? A. No, sir ; not at all; the stated salaries and nothing 
beyond that. 

Q. This, then, is the highest ever reached, $25,000, and the allow¬ 
ance of $250? A. Yes, sir, it is the highest ever reached, and prob¬ 
ably that ever will be reached. 

By Mr. Moody : 

Q. In doing business in the JState of Virginia how are you required' 
to deposit the bonds ? A. Why, we are required by the act of the 
Legislature. 

Q. In proportion to the amount of business you do, or how? 
A. In proportion to the amount; the law of the State requires us, 
say, to deposit a certain amount as a condition of being allowed to 
do business there, generally ; we never have increased or diminished 
our deposit. 

Q. It is the same in all the southern States ? A. I believe it is 
the same. 

By Mr. Moak : 

Q. Have those State obligations paid their interests ? A. They 
have not paid for several years; some of them are depreciated in the 
market. 

Q. They are depreciated in the market? A. Yes, they are at the 
present time, from what we paid for them ; the Richmond city bonds, 
however, do pay their interest. 

Q, The Mississippi, 1 see, are bought at $15,000, and quoted worth. 
$20,000 ? A. Yes, but that is an exception to the general rule. 

By Mr. Wei ant : 

Q. What was the aggregate face value of the policies that were 
forfeited during the past year? A. Well, we have paid— 


188 


Q. What was the aggregate face value forfeited during the year, I 
ask you ? A. I cannot tell you. 

Q. Can’t you give an aggregate idea? A. You can guess yourself 
as well as I can ; I can’t tell without seeing the books. 

Q. Have you examined the books ? A. Yes, sir. 

Q. Can’t you give us, then, your general recollection as to the face 
value of the policies forfeited during the year ? A. Well, I would 
say about $400,000, without being bound by the statement. 

Q. How, give us an idea of what the reserve value of the policies 
was ? A. The reserve value would be twenty-five or thirty per cent 
of the premiums paid. 

Q. Are these particular policies in your company forfeited ? A. I 
mean with reference to the policies, generally. 

Q. That won’t give us any idea ? A. Well, I can’t tell you with¬ 
out reference to the books. 

Q. You know generally how long they have run ? A. I have no 
distinct recollection, and therefore I cannot give any opinion with¬ 
out having something to base it on ; the vice-president, who is the 
actuary, probably will be able to give you all the information; my 
business is to have a general supervision. 

Q. Could Mr. Beers give us the information? A. Yes, sir, I 
believe he could, and he will with great pleasure if you notify him 
what you want. 

Q. Who has the charge of employing attorneys? A. The officers 
employ them. 

Q. Who ? A. The president and vice-president. 

Q. Have you taken part *in it ? A. I have given my consent to 
the employment of certain individuals so for as the city is concerned. 

Q. Will you give the names ? A. Fullerton, Ivnox and Crosby are 
the counsel, and Mr. Bogert is the attorney to examine the titles. 

Q. Any one else? A. Ho, sir. 

Q. Has any one else foreclosed mortgages for you during the past 
year? A. My opinion is there are two or three foreclosures in the 
liands of Mr. Tail. 

Q. Do you know his Christian name ? A. I really have forgotten. 

Q. Any others ? A. Ho, sir* no others. 

By the Chairman : 

Q. Should the committee desire further information Mr. Beers can 
give it? A. I think he can, and he will with a great deal of plea¬ 
sure. 

By Mr. Weiant : 

Q. Can he give more information on these subjects? A. He can, 
because he is more familiar with the books than 1 am. 

Q. Have you any stock in the company ? A. We have no stock ; 
we are mutual. 

Q. How many policies has your company out? A. Forty-five . 
thousand four hundred and twenty-one. 

Q. Your directors are elected annually? A. A portion of them; 
we have twenty directors, five of whom are elected each year. 


189 


Q. The election takes place at your home office in New York city ? 
A. At the home office in the month of April. 

Q. Generally how many persons attend that are entitled to vote ? 
A. Well, we receive from 150 to 300 votes. 

Q. I did not ask you that; I ask you how many attend that are 
entitled to vote ? A. I don’t know as to that. 

Q. If others are voted they are by proxy? A. Yes, sir; com¬ 
paratively few vote. 

Q. How long have you known the proxies to be continued in force 
by any one director, without being changed ? A. I don’t know of 
any being changed. 

Q. They run how many years ? A. Ad infinitum. 

Q. Well, in the practical working of the company, how long do 
they run? A. Perhaps ten years or longer. 

Q. Some longer? A. Yes; may be twelve or fifteen years; I 
cannot tell the dates of them. 

Q. Is there any such thing as persons holding proxies on policies 
which have been canceled? A. No, sir; we always examine proxies 
coming in, and see that they are on exisi 

Q. You always do? A. Yes, sir; no 
which has lapsed. 

Q. Don’t you think it will be better to limit the time in which 
those are in force, without being renewed? A. I see no harm in it; 
I think the more safeguard you throw around it the better. 

Q. You think there can be no harm in it, and that it might be 
beneficial ? A. Yes, sir. 

By Mr. Moak : 

Q. Do you know if there is such an organization as the Chamber 
of life Insurance? A. I know there is; yes. 

Q. Are you a member of the organization? A. I am nominally ; 
and have attended two or three of the meetings. 

Qw Have any of the others attended ? A. Mr. Beers has. 

Q. You take no interest in it? A. No, sir; I attend the organi¬ 
zation, sometimes, but very rarely; scarcely sufficient to say I attend 
at all. 

Q. Mr. Beers represents your company ? A. So far as it is repre¬ 
sented. 

Q. Can you give us the object of it? A. It is to protect the 
business of life insurance ; the same as a chamber of commerce and 
the dry-goods chamber protect the interest of those concerned ; it is 
a voluntary institution ; not incorporated. 


ing policies. 

policy is voted on by proxy 


By the Chairman : 

Q. For the common interest of all? A. Yes, sir. 

By Mr. Moak : 

Q. It is an organization, notwithstanding, to protect life insurance 
companies? A. That is the object of it. 


190 


Q. Are the policyholders represented in the organization, except 
as they may be policyholders in the company which is represented? 
A. No, sir; I think the companies are merely represented, inde¬ 
pendent of the policyholders. 

Q. Do you know whether this organization has attorneys em¬ 
ployed ? A. I do not know, sir. 

Q. You cannot give us any information as to the practical work¬ 
ing of it ? A. I have no information, sir, with reference to it. 

By the Chairman : 

Q. You can state the object for which it was organized? A. For 
the protection of life insurance interests; that is the object of it, and 
to keep advised with reference to legislation in different States. 

By Mr. Moak : 

Q. Is Mr. Charlton T. Lewis, the secretary of the organization, 
charged with the duty of getting that information ? A. I think he 
is; that is one of the duties of the office. 


Hon. James G. Graham, Chairman of Insurance Committee of 

the Assembly of New York. 

Dear Sir— It is reported that a movement will be made in the 
Legislature -f New York to adopt the non-forfeiture law of Massa¬ 
chusetts. This law, while benefitting a few who have the misfortune 
to lapse their policies, is frequently detrimental to the interests of 
those who continue to keep their policies in force; and it is question¬ 
able, furthermore, whether the former class reap more benefit from 
taking advantage of this law than they would by obtaining a paid- 
up policy for what the reserve will purchase. There are few who 
die while covered by the provisions of this law. The majority out¬ 
live the period which this law requires the reserve shall purchase in 
temporary insurance- Thus they consume their entire interest, when it 
would have been wiser to take a paid-up policy. In a mutual com¬ 
pany no profit should accrue to one member from the lapsing of 
another’s policy. The mutuality of the policyholder should be strict¬ 
ly guarded by law, so that when a policy has lapsed his interest 
should not cease, but a fixed amount of paid-up insurance should be 
given according to the reserve of each policy. The Massachusetts 
insurance law precludes the formation of a stock company, for the 
reason that the reserve and the non-forfeiture feature, required under 



191 


the law, would bar any considerable profit to stockholders, and in 
this respect it may be regarded as a wise law. Most of the fatal 
results that have overtaken our companies have been confined to our 
stock or mixed companies. When stockholders are permitted to 
apply certain profits which arise from the payments and accumula¬ 
tions of policyholders to themselves , it follows that their cupidity 
may lead them, as it has lead them, into every extravagance to obtain 
as large a business as possible, they have everything to make and 
little to lose. The system of paying extravagant guarantees, salaries, 
office rents, &c., and of obtaining agents in every way, has been 
freely resorted to by such companies. Fictitious and seductive plans 
have been offered to attract and deceive the public; tontines, reserve 
dividends, interest bearing plans, and hosts of others, all pernicious 
and injurious to real life insurance. Undoubtedly the law should 
bridle such unlimited license in the corporations they charter, and 
the public should be guarded from such designing schemes. This 
free and liberal policy was pursued to the fullest extent by the Equi¬ 
table Life among others. Large guarantees were given and many of 
them; heavy rents were paid for offices throughout the whole 
country ; extravagant literature and advertising were freely used ; 
the funds of the policyholder flowed like water in every conceivable 
way to secure business, that the officers who received a commission 
on the business obtained should reap more benefit. The officers 
having nothing to lose, and everything to gain, used the funds of the 
policyholders, upon whom alone all losses fell. It was necessary for 
the company to pay large dividends, in order to compete with 
other companies having spent all the surplus in obtaining 
new business, they found themselves without anything to 
divide. A dividend they must declare or go down. In this emer¬ 
gency, it is alleged, they resorted to assessing their reserve, which 
they did, designing to reduce their expenses the following year to 
make up the deficiency. But they found they could not reduce their 
expenses, and the next year they were in the same predicament, and 
again assessed their reserve. This was continued until about 1869, 
when the Tontine system was established, designed to hold the sur¬ 
plus for a period iiot less than ten years on all such policies. It is 
said they went systematically to work offering to their agents a pre¬ 
mium or commission on all changes they could effect of their old 
policies to the tontine plan, and bent their whole energies to build 
up all their new business on this plan. Now if this Tontine fund is 
held to be, as it really is, a liability to the Tontine policyholders, 
then this so-called surplus would be shown in its true light. Hitherto 
it has been included with the surplus as regards policyholders, thus 
classing a debt among the assets. What applies to the Equitable, as 
regards the Tontine system, equally applies to the New York Life 
and some others. The power placed in the hands of a few stock¬ 
holders, such as those of the Equitable, is beyond conception. They 
have over $30,000,000 belonging to to the policyholders, and yet the 
latter have no voice to protect themselves, and to-day the stockhold¬ 
ers of this company could transfer the whole interest to a confeder¬ 
ate as had been done before by some other companies. Not a day 


192 


should this power exist. It should be broken up by the strong hand 
of the law. The policyholders having the most interest at stake, 
should regulate the affairs of the company by their votes. No officer 
should be permitted to vote as a proxy. Otherwise the very object 
of these votes is defeated. For it is a well-known fact that every 
president of our large mutual companies can keep his position 
through the use of proxies obtained from policyholders by the em¬ 
issaries of such officers, generally agents. It should be a penal offence 
for any officer or agent to be engaged in such a transaction. The 
policyholders should not be required to appear at the office of the 
company to vote. Let him forward his vote from his place of resi¬ 
dence, affixing it to the certificate of a notary. By such a course no 
officer would have anything to fear provided he did his duty, nor 
could there be any decided combinations if the affairs of a company 
were fully made public as they should be. 

The Massachusetts standard of reserve of four per cent combined 
experience is surely the correct one. The best proof of this is that 
no New York company represented in Massachusetts dares to divide 
on the New York standard of four and a-half per cent American 
experience, and the large surplus shown by the latter standard only 
tends to deceive, and frequently excites comment. The low rate of 
interest on first-class securities comes so very near the standard of 
four and a-half per cent intereft that but little margin is left for 
contingencies. The losses that may occur in investments of real 
estate mortgages may still further reduce the net rate of interest, so 
that it is hardly safe to calculate on an average interest of more than 
five and a-half to six per cent. The Mutual Life, by the New York 
standard, shows a surplus of about $10,000,000, while by the 
Massachusetts standard of only about $4,000,000. Assuming that 
the New York standard is unsafe, suppose they were to divide by it, 
where would they be in a few years ? As they do not dare to do it, 
why should the State of New York adhere to a standard of reserve 
that is useless as a regulation of divisible surplus. It would be well 
for the insurance interest if there could be a uniform standard of 
reserve for New York, Massachusetts, and Connecticut, the three 
great insurance States. The rest would soon fall into line. If the 
four per cent combined experience was adopted by New York, and 
a fixed table adopted regulating paid-up policies upon s urrender or 
lapse, it would indeed go far to secure to unfortunate policyholders 
rights from which they are now debarred. 

The custom of paying cash surrender values cannot be considered 
as advancing the interests of life insurance and should be discoun¬ 
tenanced. It tends to deplete the business, holding out to the pol¬ 
icyholder inducements to lapse his policy, and renders him, as is too 
often the case, a prey to designing agents, who only aim to obtain a 
commission, even at the sacrifice of their victims. The system is 
pernicious and full of tricks and injustice; still the company should 
be free to act in this respect, otherwise some of the policyholders 
might suffer, and consequently the interest of the company. While 
there should be a standard value for policies, there should be no 
law compelling companies to purchase them. The dividends of a 


193 


mutual company should in no oase be permitted to be forfeited. The 
word dividend is purely a misnomer. What is called a dividend is 
simply the unused portion of the premium, and should be returned 
upon application of the policyholder when his premium is due, or 
used in reducing the following premium. When not applied for, 
and the premium is unpaid when due, the company should be com¬ 
pelled to continue the policy in force so long as the dividend or un¬ 
used portion of the premium will carry the policy, and during this 
period the policy should not be subject to forfeiture. But one com¬ 
pany in New York, “the Washington Life,” has voluntarily adopted 
this just and equitable application of this fund. 

Companies have undoubtedly paid excessive commissions, yet no 
law should be enacted regulating the rate to be paid by any com¬ 
pany. The status of the company, if correctly reported, will regulate 
this subject. If a company goes beyond the bonds of prudence, 
its condition should be shown, the facts exacted, and the promulga¬ 
tion of these facts will bring a sure remedy for the evil; besides, 
any attempt to fix a rate of commission will place the New York 
companies at a disadvantage in competing with foreign companies, 
who are not restricted, and would militate against the smaller com¬ 
panies. Thus the “Mutual Life” by its weight could crush the 
weaker or younger companies, who could hardly compete on equal 
terms so far as • commission go, but who could compete in other 
ways notwithstanding the necessity for paying a little higher com¬ 
mission to agents. When a company cannot comply with the in¬ 
surance law, and is shown to be insolvent, it is as ruinous to permit 
it to be absorbed or reinsured as to place it in the hands of a re¬ 
ceiver. In both cases the policyholders are sacrificed, and the com¬ 
pany absolutely ruined. The policyholders, being really the only 
ones interested after the guarantee or stock capital is absorbed, as it 
must be in case of failure, should be the ones to decide as to the 
future conduct of their affairs. Upon the failure of a company a 
meeting of the policyholders should be called by the Superintendent 
of Insurance, for the purpose of disposing of their rights, and they, 
and they only should decide this grave responsibility. Could a law 
be passed authorizing or permitting an insolvent company to appoint 
a sound company as their receiver, and in no way making the com¬ 
pany accepting the receivership responsible beyond the responsibility 
attached to the office, the difficulties and dangers attending the 
future of insolvent companies might be met and overcome. It 
would be to the interest of all companies to reinstate any fallen institu¬ 
tion, and by proper management and a radical reduction of expenses 
any company having say thre° thousand policyholders or over could 
be placed upon a sound foundation if carefully managed. This 
can be done more surely by a life company than in any other way, 
and with far less expense as can be plainly seen. No sound com¬ 
pany having a due regard to its interests, would reinsure an unsound 
one, and, consequently, as the case now stands they must be left to 
their fate, and to the tender mercies of a designing receiver, and the 
harpies that congregate around him. If the policyholders have the 


194 


power to elect who shall be appointed their receiver, and could ob¬ 
tain the consent of a recognized, sound company to act as such, with 
the approval of the superintendent, they could continue to pay their 
premiums, assured that they would receive full and equal justice, and 
when their company is brought to the point of solvency they could 
be released, elect new officers, and again resuijie business; or a de¬ 
partment might be formed under the laws of the State whose office 
it should be to take charge of all companies in course of liquidation, 
thus re-establishing a feeling of perfect security among policyholders 
and the public. The State need be at no expense in establishing 
such a department, but, on the contrary, quite a revenue might be 
derived from such a system, as the fees allowed to receivers would 
inure to the State. 

I have the honor to be your obedient servant, 

W. S. MANNING. 

Newburgh , N. Y. March 24, 1877. 


Hon. Geo. W. W eiant, Member of the Insurance Committee New 
Iork Assembly : 

Dear Sir: —The following article was written in 1872, but never 
published, and shows what was done in order that the Equitable 
might show a surplus on a four per cent valuation : 

u The oversight or disregard in certain cases by the Insurance 
Commissioner of Massachusetts, in his seventeenth annual report, of 
a rule of his own department, is so striking as to attract attention. 
Its importance can hardly fail to bring from that official explanation 
and correction, when we shall find that other State Insurance De¬ 
partments as— e. g .: that of New York, Kentucky, Michigan, et al. 
—have impartially enforced a corresponding practice. They seem 
to have been impressed by the sentiment to which forcible expres¬ 
sion has been given in a contemporaneous report, to wit: that ‘ too 
great vigilance cannot be shown in disclosing the actual condition of 
corporations entrusted with such enormous and delicate interests.’ 

The oversight or disregard adverted to appears prominently in the 
returns of the Equitable Life Assurance Society of New York, in 
the Massachusetts report of 1872 for business of 1871. , 

On page 83 of that report is found in the statement of the Equit¬ 
able the amount of $157,153. Admitted as ‘bills receivable, secured 
by satisfactory collaterals,’' which, as appears by returns made by 
that Company to the Insurance Departments of Ohio, Michigan 



195 


Kentucky, and others, is really “ balance of agents’ accounts,” 
a agents balances,” u cash in the hands of agents due the company,” 
does not appear in the assets of that company in the New York 
Report, is thrown out by the superintendent of the department, 
and by him classed with “ Items not admitted as available assets,” 
included by him in the amount (page 37 N. Y. Report), $219,485.64, 
as cash in the hands of agents due the company.” 

Singularly enough, the difference between the last named amount 
not admitted in the New York report and the $157,158 referred to 
to wit, $62,832.64 is also admitted by the Massachusetts Commis¬ 
sioner. 

Again, a further illustration of oversight by the Massachusetts 
Commissioner in the case of the same company appears in the 
startling figures $737,206.83 admitted as “ cash on hand in the 
office of the company and awaiting investment,” whilst but $240,- 
249.67 of the amount in the New York Report and other reports 
was actually u cash in office of company,” and the remainder, $496,- 
957.16, is found included with $62,332 64 in a total of $550,283.80 
in the Connecticut Report (page 53) as “ Cash in the hands of agents 
due the Company 

Again, a further forcible illustration by the Massachusetts Com¬ 
missioner in the same case appears in the admission of the deduction 
from the amount of “gross premiums uncollected” and “gross de¬ 
ferred premiums” ($891,991.77 Ohio Rejjort) of only five per cent 
to “ reduce the amounts to the net values charged against them 
“ amounting to $847,392,19—whilst in the Ohio and other reports, a 
deduction is made by the company of 15 per cent ($133,798.77), 
and by the Superintendent of New York (page 37) and Commissioner 
of Kentucky (page 177) of $44,599.58, which is 5 per cent additional 
to the 15 per cent charged in the New York Report and 5 per cent 
additional to the 25 per cent charged by the Commissioner of Ken¬ 
tucky. 

Hence it appears that the oversight or disregard of the Commis¬ 
sioner of Massachusetts of a rule of his own department*—the ad¬ 
mission as available assets of the Equitable of $157,153 and 
$62,332.64 and $496,957,16 of “ cash in the hands of agents” (Conn, 
report), and $133,798.93 deducted by the company, and $44,598.58 
thrown out by the various departments, a total of $895,841 31— 
swell the assets of that company in his report to $16,079,346.05. 

Had the commissioner strictly enforced his own rule in this case, 
as he has done in that of many other companies, he would have de¬ 
ducted this total from the claimed available assets of the Equitable. 
The result would have been as follows: surplus as claimed $692,395.95 
less $895,841.31, a result which would have been an exhibit of 
liabilities beyond the surplus stated of $203,445.36, absorbing its 
entire capital of $100,000, and leaving $103,445.36 still unprovided 
for. 

It is peculiarly suggestive that the oversight of the commissioner 
noticed favors the Equitable by its partiality. In the cases of the 
Mutual Life of New York, the Connecticut Mutual, the Brooklyn 
Life, the Manhattan Life, and others, this partiality does not appear, 


196 


and it is of this that complaint is made. An impartial enforcement 
of his own rule by the Massachusetts commissioner would be 
beneficial; in fact, it is an admitted necessity for the good of the 
cause. 

Now, an honest and rigid investigation of the affairs of the com¬ 
pany should be made at once, other than by an interested committee 
of policyholders, organized, as it would appear, to whitewash, assisted 
by an incompetent superintendent, or what might be supposed to be 
something worse. 

I have the honor to be, 

Your obdt. servant, 

W. S. MANNING. 


Albany, N. Y. } 

March 27. 1877. 


* The propriety of such exclusion may be judged of, when we state 
the fact that about one-fourth of all the companies represented, 
claimed no value for them, while fully one half of the remaining 
companies officially informed us that, in their opinion, the items thus 
rendered by them, in some cases very large, were considered by them 
to be of little value. * * Upon careful and impartial consideration, 
there seemed to be an eminent propriety in treating them all as 
“ unadmitted assets.” * * * 



197 


Tuesday, March 27, 1877. • 


The committee met at nine o’clock a.m. Present, the full com¬ 
mittee ; Judge Graham in the chair. 

i 


Wm. H. Beers sworn. 


Examined by Mr. Moak : 


Q. You are vice-president of what company? A. Yice-president 
and actuary of the Hew York Life Insurance Company. 

Q. How long have you been vice-president of that company ? A. 
About seven or eight years, I think. 

Q. How long were you actuary ? A. Since 1864, I think. 

Q. You were actuary before you became vice-president? A. Yes, 
sir; I was actuary before that. 

Q. I sent yesterday afternoon to the Insurance Department for the 
annual report of your company for 1876, and they said it was returned 
for correction ? A. Ho, sir; not for correction, but to put in the 
value of the insurance policies as made up by the actuary of the 
Insurance Department. # 

Q. Was that the only change in it ? A. It was no change at all; 
it was an addition. 

Q. Well, an addition is a change, is it not? A. Well, call it a 
change, if you please, that is the only one. 

Q. Was that an omission ? A. Ho, sir; it is not an omission, but 
the figures have to be put in by the department; there is a blank 
that we always leave unfilled, and they make the calculation, as we 
cannot make the calculation ; we have to send the report to the 
Insurance Department, and that must be left in blank, in that 
particular. 

Q. When was that report sent to the Insurance Department? A. 


i 


198 


It was before the time specified by law, but I do not remember the 
exact date. 

Q. Before the first of January ? A. We are allowed by law sixty 
days from that time to complete it. 

Q. Well, before the first of March ? A. Yes, sir. 

Q. How long ago was it returned to you ? A. About a week. 

Q. Was it not sent on Saturday last ? A. Ho, sir. 

Q. Have you returned it ? A. It was sent by express yesterday 
afternoon ; I have a certified copy here which I produce. 

Q. Is this the copy of it as corrected ? A. Hot as corrected in the 
way you used that term. 

Q. Well, suppose you allow me to use it ? A. Ho, sir, I cannot 
allow you to use that term, because the report has not been changed 
since it has been sent to the department at all. 

Q. Has it been filled in? A. Ho, sir; because the department 
don’t let us fill it at all. 

Q. Why was it filled in? A. Because we desired to have it 
filled in. 

Q. Where is the blank ? A. Here it is. [Returns produced.] 

UHITED STATES OF AMERICA. 

By Lucius Robinson, Governor of the State of Hew York. 

It is hereby certified, that John F. Smyth was, on the day of the 
date of the annexed certificate, Superintendent of the Insurance 
Department of the State of Hew York, and duly authorized to 
grant the same; that the same is in due form and executed by the 
proper offi cer; that the seal affixed to said certificate is the seal-of the 
Insurance Department of the State of Hew York; that the signa¬ 
ture thereto of the said Superin tendent of the Insurance Depart¬ 
ment is in his proper handwriting and is genuine; and that full 
faith and credit may and ought to be given to his official acts. 

In testimony whereof, the great seal of the State is hereunto- 
affixed. 

Witness my hand, at the city of Albany, the ninth day of March,, 
in the year of our Lord one thousan d eight hundred and seventy- 


seven. 

[l.s.] 


L. ROBIHSOH. 

Passed the Secretary’s office, the ) 


I 

9th day of March, 1877. f 

% 



John Bigelow, 

Secretary of State. 


Insurance Department, > 
Albany, March 9, 1877. j 

I, John F. Smyth, Superintendent of the Insurance Department 
of the State of Hew l r ork, do hereby certify that I have compared 
the annexed copy of the annual statement of the Hew l r ork Life 
Insurance Company of the city of Hew York and State of Hew 


199 


\ ork, for the Year ending December 31, 1876, with the original on 
file in this office, and that the same is a correct transcript therefrom, 
and of the whole of said original, schedules excepted. 

In witness whereof, I have hereunto set my hand and affixed my 
official seal, at the city of Albany, the day and year first 
[l.s.] above written. 

JOHN F. SMYTH, 

S uperintendent. 

Annual Statement. 

For the year ending December 31, A. D., 1876, of the condition of 
the New York, Life Insurance Company, organized under the 
Laws of the State of New York , made to the Superintendent of 
Insurance of the State of New York , pursuant to the laws of 
said State. 

President, Morris Franklin ; Vice- President, William H. Beers ; 
Actuary, William IL Beers', incorporated 1811; commenced busi¬ 
ness, 1845 ; principal office, 346 and 348 Broadway. 

[No premiums are paid by dividends or surrendered policies, and nothing but 
cash and a certain per centage in premium notes is received by the company, or by 
its charter allowed to be received in payment of premiums.] 

I. Capital Stock . 

No capital Stock. 

Extended at - - - - - - $30,166,902 69 

II. Income during the year 1876. 

Cash received for pre¬ 
miums without re¬ 
ductions without 
commissions or oth¬ 
er expenses -$5,620,537 97 

Premiums paid by 
dividends, includ¬ 
ing reconverted ad¬ 
ditions, $-; 

by surrendered pol¬ 
icies, $-; 

see margin. 

Cash received for an¬ 
nuities - - 290,302 90 

Total - -$5,910,840 87 

Deduct amount of 
premiums paid to 
other companies for 
reinsurance, on pol¬ 
icies in this com¬ 
pany, less dividends 
thereon - - 55,692 16 


Total premium income 


- $5,855,148 71 






200 


Cash received for in¬ 
terest upon mort¬ 
gage loans - -$1,354,012 50 

Cash received for in¬ 
terest on bonds 
owned, and divid¬ 
ends on stock 
Cash received for in¬ 
terest on premium 
notes, loans or liens 
Cash received for in¬ 
terest on other 
debts due the com¬ 
pany - 
Cash received as dis¬ 
count on claims 
paid in advance (in¬ 
cluded in No. 9.) 

Cash received for 
rents for use of 
company’s property 67,182 43 


624,323 58 


86,876 95 ' 


31,685 35 


Cash received for 
profits on bonds, 
stocks or gold, act¬ 
ually sold - . -$2,164,080 81 

Cash and notes other 
than premiums re¬ 
ceived from other 
companies for as¬ 
suming or reinsur¬ 
ing their risks, less 
accrued January 1, 

1876, . ' . $257,130 86 

-$1,906,949 95 

Total income, .... $7,762,098 66 


Total, 


. $37,929,001 35 


III. Disbursements during Year 1876. 

Cash paid for losses 
and additions, .$1,571,780 94 
Premium notes, loans 
or liens used in 
payment of the 
same, . . 20,867 48 

Cash paid for ma¬ 
tured endowments 
and additions, . 86,871 10 






201 


Premium notes, loans 
or liens used in 
payment of the 
same, . . 1,419 40 

Total, . .§1,080,938 92 

Deduct amount re¬ 
ceived from other 
companies for losses 
or claims on pol¬ 
icies of this com¬ 
pany reinsured, of 

which $-is 

for matured en¬ 
dowments, . . 45,000 00 


Total amount actually paid 
for losses and matured en¬ 
dowments, 

Cash paid to annuitants, 

Cash paid for surrendered policies, . 

Premium notes, loans or liens used 
in purchase of surrendered pol¬ 
ices, and voided by lapse, 

Cash surrender values, including re¬ 
converted additions applied in 
payment of premiums, see 
margin. 

Cash dividends paid to policyholders 
$1,385,569.04; same applied in 
payment of premiums, see 
margin, . 

Premium notes, loans or liens used 
in payment of dividends to pol¬ 
icyholders, 

Cash paid for commissions to agents, 

Cash paid for salaries and traveling 
expenses of managers of agencies 
and general, special and local 
agents, estimated, 

Cash paid for medical examiners’ 
fees, .... 

Cash paid for salaries and other 
compensation of officers and office 
employes, .... 

Cash paid for United States taxes 
and revenue stamps, State and 
local taxes in State where organ¬ 
ized, taxes, licenses, lines and fees 
in other States, 


$1,635,938 92 
90,247 56 
1,044,056 46 


63,315 66 


1,385,569 04 


23,740 00 
*222,110 67 


57,000 00 
41,491 67 


167,659 78 


62,078 25 






202 


Cash paid for commuting commis¬ 
sions [included in No. 14]. 

Cash paid for furniture and fixtures 
and safes for home and agency 
offices [included in No. 24]. 

Cash paid for advertising, . 

Cash paid for the following items, 
viz.: Office, law and agency ex¬ 
penses, . 

Reduction premium, United States 
stocks, . 

Reduction premium, other stocks, . 


40,543 41 

158,812 86 

140,232 32 
65,307 19 


Total disbursements, .... 5,198,103 15 


Balance, . . . . $32,730,898 20 


IV. Assets. 


As per Ledger Accounts. 

(a) Cost value of real estate ex¬ 
clusive of all incumbrances, as 
* per schedule A, . . $2,541,576 46 

Loans on bond and mortgage. [first 
liens] on real estate, as per sched¬ 
ule B, . . . 17,354,837 84 

(i h ) Premium notes, loans or liens 
on policies in force, the reserve on 
each policy being in excess of all 
indebtedness thereon, . . 781,585 39 

(< g ) Cost value of bonds and stocks 
owned absolutely, as per sched¬ 
ule E, ' . . . 9,730,529 91 

Cash in company’s office, cash de¬ 
posited in banks, and in course of 
transmission, all of which has 
since been received and deposited 
in New York banks, . . 1,427,933 18 

Agents’ ledger balances, . . 36,154 19 

- $31,872,616 97 


Other Assets. 

Interest due and accrued on bonds and mortgages, 
Interest due and accrued on bonds and stocks, 
Interest due and accrued on premium notes, loans 
or liens, ...... 

Rents due and accrued on company’s property or 
lease, ...... 

Market value of bonds and stocks over cost, as per 
schedule E, 


$224,052 75 
42,320 39 

25,709 37 

8,476 17 

580,515 76 







203 


Gross premiums due and unreported 
on policies in force December 31, 

1876, .... $125,127 15 

Gross deferred premiums on policies 

in force December 31, 1876, . 432,695 40 

Total, . . . $557,722 55 

Deduct the loading on above gross 

amount, .... 111,544 51 

Net amount of uncollected and deferred premiums, 446,178 04 

Total assets as per the books of the company, $33,199,869 45 

% 

Items not admitted . 

Agents’ balances, . . . . . 36,154 19 

Total assets (less items not admitted), . $33,163,715 26 


V. Liabilities. 

Net present value of all the out¬ 
standing policies in force on the 
31st day of December, 1876, com¬ 
puted according to the American 
experience table of mortality, 
with four and one-half per cent 
interest, . . . .$26,623,287 00 

Deduct net value of risks of this 
company reinsured in other sol¬ 
vent companies, . . . 183,176 00 

Net reinsurance reserve, . . . $26,440,111 00 

Claims for death losses and matured 
endowments in process of adjust¬ 
ment, or adjusted and not due, . $418,393 19 

Claims for death losses and other 
policy claims resisted by the com¬ 
pany, .... 97,200 00 


Total policy claims, .... 515,593 19 

(a) If the cash value of real estate is less than cost, the amount of the deprecia¬ 
tion should be deducted after the balance of “ total net ledger assets” is given, 
and should also be shown on schedule A. 

(b) This item to include only premium notes, loans or liens taken for part pay¬ 
ment of premiums. 

(c) If the cash value of bonds and stocks is less than cost, the amount of the de¬ 
preciation should be deducted after the balance “ total net or ledger assets” is 
given, and should also be shown on schedule E. 


t 










204 


Amount of any other liability of the company, viz.: 

Premiums paid in advance . . . $17,038 32 

Liability under, of three months’ clause . . 10,000 00 


Liabilities on policyholders’ account . $26,982,742 51 

Gross surplus on policyholders’ account . 6,180,972 75 


Total liabilities $33,163,715 26 


Estimated surplus accrued on Ton¬ 
tine or other policies, the profits 
upon which are especially reserved 
for that class of policies . . $517,504 84 


VI. Premium Note Account. 

Premium notes, loans or liens on 
hand December thirty first of pre¬ 
vious year . . . $885,728 82 

Premium notes, loans or liens re¬ 
ceived during the year . . 17,590 60 


Total ...... $903,319 42 

Deductions during the year, as follows: 

Amount of notes, loans or liens used 


in payment of losses and claims 
Amount of notes, loans or liens used 
in purchase of surrendered poli- 

$22,286 88 


cies, and voided by lapse 

Amount of notes, loans or liens used 
in payment of dividends to policy- 

63,315 66 


holders .... 
Amount of notes, loans or liens re- 

23,740 00 


deemed by maker in cash 

12,391 49 


Total reduction of premium note account 

121,734 03 

Balance, note assets at end of the year 

$781,585 39 













205 


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D 


YII. Exhibit of Policies. 

The following is a correct statement of the number and amount of policies, including additions, in force at the end of 
the previous year, and of the policies issued, revived or increased, and of those which have ceased to be in force during 
the year, and of those in force at the end of the year: 


























































































































































Miscellaneous Questions. 

Upon what table of mortality and rate of interest were the net 
premiums of the company computed ? A. Some on Carlisle, some 
on American Experience four per cent participating and live per 
cent non-participating. 

What loading, for margin or expenses, is cast upon the net premi¬ 
um used in computing the reserve, of each class of policies issued 
by the company ? A. Variable. 

What proportion of premiums on policies issued by the company 
may be taken in notes or other form of lien on the policies? A. 
Some years ago it was the custom to allow a note equal to forty per 
cent of the ordinary life rate, but this system has been abandoned ; 
the business of the company is exclusively cash. 

Does the company hold any premium obligation on any policy, in 
excess of the net reserve (as valued in this statement), on such policy ? 
A. No. 

Has any policy been “marked off,” or reported “not in force” on 
the thirty-first of December, on which any legal claim could have 
been made, either for full-paid insurance, for reinstatement upon 
complying with certain prescribed terms, or for surrender value; if 
this had been done, a registry list of all such policies is required ? 
A. No policy, under which any legal claim could have been made, 
is canceled. 

What amount of stocks and other securities is deposited in various 
States and countries under the laws thereof, for the protection of all 
the policyholders of the company, and where have such deposits 
been made? A. With Insurance Department, Albany (N. V.), 
$106,000. 

What amount of stocks and other securities is deposited in various 
States and countries, which, under the laws thereof, is *held exclu¬ 
sively for the protection of policyholders of such States or countries ; 
name States and countries, and amounts respectively? A. Canada, 
$100,000 ; Virginia, $50,000 ; Mississippi, $20,000. 

Is the business of the company conducted upon the mutual, mixed, 
or strictly proprietary plan ? A. Mutual plan. 

What proportion of the profits of the company may be paid to 
stockholders for use of real or guaranty capital ? A. No stock¬ 
holders; all profits are divided among the policyholders. 

Does your company issue any policies in which the Tontine prin¬ 
ciple is to be applied in making dividends thereon ? A. Yes. 

Business in New York daring 1876. 


Number and amount of policies on the 
lives of citizens of New York in force 

Number. 

Amount. 

December 31 of previous year, estimated 
Number and amount of policies on the 
lives of citizens of New York issued 

9,602 

$29,499,610 

during the year, estimated 

871 

2,721,780 

Total, estimated 

10,473 

$32,221,390 





Deduct number and amount which 


have ceased to be in force during 
the year, estimated 

1,212 

3,915,990 

Total number and amount of 
policies in force in New York 
December 31, 1876, estimated 

9,261 

$28,305,400 

Amount of losses and claims on policies in 
New York unpaid December thirty-first 
of previous year . 

20 

$71,247 

Amount of losses and claims on policies in 
New York incurred during the year 

132 

374,375 

Total .... 

152 

$445,622 

Amount of losses and claims on policies in 
New York paid during the year 

121 

342,454 


AVhat amount of premiums was collected or secured in New York 
during the year, in cash and notes, or credits, without any deduction 
for losses, dividends, commissions, or other expenses ? A. Notes or 
credits, estimated, $1,200,000. 


STATE OF NEW YORK, ) . 

County of New York, j ss ' * 

Morris Franklin, president, and William H. Beers, vice-president, 
of the New York Life Insurance Company, being duly sworn, 
depose and say, and each for himself says, that they are the above- 
described officers of the said company, and that on thirty-first day of 
December last all the above described assets were the absolute prop¬ 
erty of the said company, free and clear from any liens or claims 
thereon, except as above stated; and that the foregoing statement, 
w r ith the schedules and explanations hereunto annexed and by them 
subscribed, are a full and correct exhibit of all the liabilities, and of 
the income and disbursements, and of the general condition and 
affairs of the said company on the said thirty-first day of December 
last, and for the year ending on that day, according to the best of 
their information, knowledge and belief, respectively. 

MORRIS FRANKLIN, President 
WM. H. BEERS, Vice-President. 

Subscribed and sworn to before me this j 

26th day of February, A. D. 1877. j 

Wm. F. Lett, 

[l. s.] Notary Public for New York in New York County. 














208 


Schedule A. 

Containing a brief Description of all the Real Estate owned by the 
Company , with the cost and market value thereof \ and also the 
value on the Company's books , with a correct Statement of the 
nature and amount of all liens and incumbrances thereon , in¬ 
cluding principal and interest , due and accrued. 


Quality or dimensions and location of land ; size and description of building. 

Lot sixty feet on Broadway and seventy-two feet in 
rear, by 192 feet deep, with white marble building 
thereon, New York city .... 

Lots on Fifth avenue, Sixty-third street, and on 
Ninety-third street, New York city 

Stores and dwellings on Fourth avenue, First avenue, 
One Hundred and Nineteenth street, One Hun¬ 
dred and Seventeenth street, One Hundred and 
Thirteenth street and One Hundred and Thirty- 
third street, New York city 

Stores and dwellings on Eighty-second street, Seventy- 
fourth street, Fifty-ninth street, Fifty-sixth street, 
Thirty fourth street and Mott street, New York 
city ...... 

Dwellings in Poughkeepsie, N. Y. 

Lots in Brooklyn, N. Y. 

Stores and dwellings in Elizabeth, N. J. 

Stores and dwellings in Newark, N. J. 

Farm of 405 acres, with 20 buildings, in Washing¬ 
ton, N. J. 

Dwellings on Bergen Heights, N. J. 

Dwellings in Washington, D. C. 


Cost value of 
premises. 


$1,768,174 14 
217,119 87 


101,781 12 


191,487 95 
15,148 95 
16,295 48 
84,281 56 
58,795 20 

59,575 55 
15,096 35 
13,820 29 

$2,541,576 46 


The value is equal to the cost. 





209 


Schedule E. 


Account of Stocks, Bonds and Treasury Notes of the United, States 
and of this State , and of other States ; and also of all other 
Stocks a/ad Bonds absolutely owned by the Company. 


DESCRIPTION. 

Actual coat to 
Company. 

Total par value. 

Total Market 
value. 

New York City Banks. 




Merchants’ Bank. 

$15,758 75 

$14,000 00 

$16,100 00 

Bank of America. 

8,484 00 

7,700 00 

10.164 00 

Bank of the Republic. 

1,470 00 

1,500 00 

1,470 00 

American Exchange Bank. 

10,125 00 

10,000 00 

10,500 00 

Metropolitan Bank... 

5,381 25 

5,000 00 

6,400 0 > 

United States Stocks. 




Sixes of 1881. 

840,210 63 

775,000 00 

883,500 00 

Currency sixes. 

498,015 00 

450,000 00 

549,000 00 

New fives. 

555,833 34 

500,000 00 

555,833 34 

Five-twenties of 1867. 

1,703,280 00 

1,504,000 00 

1,703,280 00 

Ten-forties. 

194,775 00 

180,000 00 

201,150 00 

State Stocks. 




Central Park loan. 

25,233 75 

25,000 00 

26,750 00 

Delaware and Hudson canal stock 

44,800 00 

64,000 00 

44 800 00 

Delaware and Hudson canal bonds 

400,000 00 

400,000 00 

400,000 00 

New York street opening bonds.. 

549,967 10 

543,500 00 i 

576.110 00 

New York county bounty bonds . 

41,104 00 

40,000 00 ! 

42.000 00 

New York city consolidated bonds 

645,596 25 

637,500 00 

745,^75 00 

New York countv consolidated bds 

113,928 75 

112,500 00 

131,625 00 

N. Y. c’cy (Moirisania and West 


tii V. • : 


Farms). 

60,000 00 

60,000 00 

60,000 00 

N. Y. Cent.and Hud. R.R.R. bonds 

1,019,382 50 

1,000.000 00 

1,170,000 00 

N.Y. and Har. R.R. consolid. b’ds 

1,074,075 00 

1,000,000 00 

1,178,333 33 

Brooklyn city bonds. 

983,144 80 

926,000 00 

1,024,700 00 

Jersey City bonds. 

442,425 00 

424,000 00 

450.590 00 

Yonkers town bonds. 

178,479 16 

175,000 00 

183,700 00 

Newark City bonds. 

129,875 00 

117,000 00 

131,210 00 

Flushing water bonds. 

77,600 00 

80,000 00 

80,000 00 

Rensselaer and Saratoga R.R b’ds 

9,519 92 

9,000 00 

10,155 00 

East Chester bonds. 

5,000 00 

5,000 80 

5,000 00 

Other States. 



1 

City of Richmond bonds. 

46,250 00 

50,000 00 

56,500 00 

Tftnn«sse« hoi ds. 

8,000 00 

20,000 00 

8,000 00 

Georgia bonds. 

2,730 00 

3.500 00 

3,500 00 

Alabama bonds. 

15,840 00 

48,000 00 

] 15,840 00 

South Carolina bonds. 

8,960 00 

28,000 00 

8,960 00 

Mississippi warrants. 

15 285 71 

20,000 00 

20,000 00 


$9 730 529 91 



v Po * 


$9,235,200 00 

■ 



$10,311,045 67 


1 



Q. Is that tilled in like the one that is on tile ? A. ^es, sir. 

Q. Who tilled it in? A. We tilled it in by permission of the 

department, and on their figures. 

Q. Why did you not let him till it in—the superintendent? A. 
Because I wanted an exact copy to bring along with me. 

14 


































































210 


Q. Was this returned before or after Mr. Franklin was sworn 
before the committee ? A. My impression is that it was before. 

Q. How came it to be returned—in what way ? A. It was a 
request we made to have it returned. 

Q. But had you ever filled in those blanks yourself before ? A. I 
don't recollect that we did. 

Q. What reason did you have for desiring it to be filled in now in 
this case ? A. We had just opened a branch in Austria, and wanted 
to have the entire annual statement filed with the government there 
as complete as it is here. 

By Mr. Weiant: 

Q. Is it not as necessary to be filed here witji our people as it is in 
Austria ? A. We are not allowed to fill up that blank ; we have to 
send the report into the Insurance Department in blank in that par¬ 
ticular. 

Q. Have you ever filled it up before ? A. No, sir. 

Q. And you say you are not allowed to ? A. No, sir. 

By Mr. Floyd-Jones : 

Q. It is sent to the department for the superintendent to make the 
figures and they merely put them in ? A. Yes, sir. 

By Mr. Moak : 

Q. Why could they not have been put in while they were on file 
as easily as for you to put them in, and a simple statement from the 
Insurance Department by the figures would enable you to fill up and 
copy, would it not ? A. No sir; because it would not be a copy. 

Q. Why not ? A. This statement we had to copy to have those 
figures. 

Q. And suppose the superintendent should put them in the copy 
on file in his office here, and write you what the figures were that he 
had put in, could you not put it in and make up the report as well as 
if you had this copy ? A. The superintendent certifies this is a copy 
of the return on file. 

Q. You could have filled it in as well as he could, could you not? 
A. We have to obey the orders of the department. 

Q. And this is the statement ? A. Yes, sir. 

Q. Your company is exclusively mutual, I believe? A. It is. 

Q. It has no capital ? A. No capital. 

Q. By whom are the directors or trustees elected; which do you 
call them—directors or trustees ? A. Trustees. 

Q. By whom are they chosen ? A. By the policyholders. 

Q. And when is that annual meeting for the election of trustees 
usually held? A. In the month of April, sir. 

Q. How many policyholders were there at the last annual meeting 
of your company, or about how many ? A. Well, I don't recollect. 

Q. You can give us some idea, I suppose ? A. There may have 
been fifty. 

Q. What ? A. There may have been fifty. 



211 


<J. What, fifty policy holders. A. Yes, sir. 

Q. Well, I should suppose there may have been that ? A. That 
is my answer, sir. 

Q. Do you mean that is a fair answer to my question ? A. I mean 
to say there is not generally more than fifty present. 

Q. But I ask you how many there were in the company? A. Oh, 

I misunderstood you ; there were forty-five thousand (45,000). 

By Mr. Moody : 

Q. Ynd you say there were fifty present ? A. Yes, sir. 

Q. And you say there were fifty thousand policyholders ? A. Forty- 
five thousand. 

- i 

Q. How many policyholders were there present at your last annual * 
•election ? A. I could not say that. 

Q. Well, about how many? A. There might be fifty. 

Q. Did some of them hold proxies from policyholders ? A. I 
don’t recollect; I was not present at the election; I don’t bother 
myself about it at all. 

By Mr. Moak : 

Q. Do you mean to say you did not attend at all at the last elec¬ 
tion ? A. I suppose I was around the building somewhere, but I did 
not pay any attention to it; there was no change in the trustees, and 
lias not been for a great many years. 

A. Will you say you did not attend the last annual meeting ? A. 

I will not. 

A. And did not vote at that meeting ? A. Ho, sir, I will not. 

Q. These persons who voted—can you name one of the fifty who 
voted ? A. Ho, sir, I cannot. 

Q. You don’t know whether any of them voted by proxies or not ? 

A. Ho, sir. 

By Mr. Moody : 

Q. Do you know by reputation ? A. It is hearsay evidence. 

By Mr. Moak : 

Q. Did you hold at the last annual meeting, proxies to vote for 
any of the policyholders ? A. I did. 

Q. How many—to what extent ? A. I don’t know. 

Q. Have you any idea ? A. Several hundred, perhaps. 

Q. Hot to exceed that? A. Ho, sir. 

Q. Hot to exceed several thousand ? A. Ho, sir. 

Q. Give us your best estimate of the proxies—for how many 
policyholders you held at the last annual meeting ? A. I have not 
the slightest idea. 

Q. You can give us within three or four thousand, I suppose ? A. 
There is not that number in the company. 

Q. Give us as near as you can ? A. I possibly held a thousand. 

Q. Hot to exceed that ? A. I don’t know. 

Q. Did you not say a few minutes ago, you held several hundred ? 

A. I might have held a hundred. 



212 


Q. Can you give us some sort of an idea liow many you held ? A- 
I tell you 1 might have held a hundred. 

Q. I ask you to give us your best judgment ? A. I said I might 
have held a hundred. 

By Mr. Moody : 

Q. Might you have held two hundred ? A. I might. 

Q. Five hundred ? A. I don’t think I held that number. 

Q. Well, three hundred ? A. No, I don’t think I did. 

Q. Well, two hundred and fifty ? A. That is as close as I will 
go. 

By Mr. Moak : 

Q. When were they obtained ? A. Within a year or two, prob¬ 
ably. 

Q. All of them ? A. I don’t know. 

Q. Were there not some of them that were obtained years and 
years ago, and not revoked ? A. No, sir. 

Q. Can you mention the names of any of the persons that gave 
you the proxies ? A. No, sir*. 

Q. Or where they were obtained ? A. No, sir. 

Q. Or how ? A. No, sir, except we ask for them. 

Q. How ? A. Either by myself or some one in the office. 

Q. Where do the persons who gave them reside, mostly ? A. I 
have not the slightest idea. 

Q. Do the agents procure proxies and forward them to you? A. 
They do not. 

Q. N ever put your name on them ? A. No, sir; not to my 
knowledge. 

By Mr. Wei ant : 

Q. Did you procure all the proxies you held, yourself ? A. Most 
of them, I think. 

Q. Don’t you know ? A. I don’t; I don’t recollect. 

By Mr Moak : 

Q. Have you information, not knowledge now, as to the number 
of proxies held by any one else connected with the company ? A. 
I don’t know, sir. 

Q. I expressly stated to you that I did not ask you for knowledge 
but information ? A. I have no information. 

Q. You have never heard any thing about it ? A. Not that I 
recollect, at this time. 

Q. Have you any knowledge or information—I call for both spe¬ 
cifically now—as to how many votes were cast for trustees at the 
last annual election of the company? A. Well, I really have not 
got any positive knowledge about it. 

Q. I ask you for knowledge and information, both ? A. My 
remembrance is there must have been 100 or 150 votes cast. 


213 


Q; That is representing from 100 to 150 policyholders ? A. It is 
may impression. 

Q- Where do the policyholders, whose policies were voted upon, 
reside ? A. I have no idea. 

Q. And you have no knowledge or information as to who they 
were cast by ? No, sir. 

Q. Do your policyholders receive any notice of the holding of an 
annual meeting for the choosing of trustees? A. No, sir; no fur¬ 
ther than it is advertised in the public papers for two weeks. 

< Q. Newspapers in the city of New York? A. Two papers in the 
-city of New 1 ork, and also in the State paper. 

By Mr. Moody : 

Q. What papers ? A. I won’t be certain but it is in all the 
papers. 

By Mr. Moak : 

Q. What papers do you know ? A. The Express and Post, and 
either the Times or Tribune. 

Q. There is no circular or notice posted in any way to the policy¬ 
holders, announcing the meeting ? A. No, sir. 

Q. What time in the day is the election usually held ? A. In the 
middle of the day. 

Q. How many trustees has your company ? A. Twenty. 

Q. When was your company organized ? A. In 1845. 

Q. ^nd you first became connected with it as an officer, when? 
A. In 1864'. 

Q. Has it had the same number of trustees since that time that it 
lias now? A. Yes, sir; except there has been a vacancy or so. 

Q. With the exception of death, there has been no change in the 
persons who were trustees; that is, with the exception of death of 
persons elected, and others elected to fill the places of those who 
died ? A. I think not: except in the case of resignation; I think 
there was one resignation, once. 

Q. When was that ? A. That was a good many years ago. 

Q. Who was that? A. It was Mr. Williams, president of the 
Metropolitan Bank. 

Q. You have in your company a finance committee? A. Yes, 
sir. 

Q. Who composed that committee ? A. It is at present composed 
of Mr. Burton. 

Q. What is his position ? He is chairman of the committee; Mr. 
H. B. Claflin, Mr. Wm. H. Appleton, Mr. Bemis L. White and Mr. 
James L. Furman. 

Q. Isn’t the president a member, ex-officio ? A. He is a member 
of all committees, ex-officio. 

Q. You have reported the amount you had in the bank on the 
first day of January, 1877? A. Yes, sir; here it is. 

Q. I see in this item you couple the two together—cash in com¬ 
pany’s office, cash deposited in banks and in course of transmission, 


214: 


all of wliicli has been since received and deposited in the h T ew 1 ork 
banks, $1,427,933.18 ; why do you couple those three together; why 
not give each separately—for instance, the amount of cash in com¬ 
pany’s office? A. Because it is not required by the department. 

Q. Is that the only reason ? A. That is the only reason. 

Q. If it is not required by the department why do they give them 
under separate heads ? A. I cannot answer that, why they do it. 

Q. How long has it been your course of business to couple them 
altogether? A. Ever since I have been in the company; it is im- 
possible to do it any other way and balance the books of the com¬ 
pany. 

Q. Why not; say on the 31st of December, you could tell how 
much cash the company had in its office; that is easily determined, 
isn’t it? A. Yes, sir. 

Q. Well, can’t you approximate how much it was? A. I cannot; 
I could if I had the books here. 

Q. It is easy enough to determine how much is deposited in the 
bank? A. Yes, sir; every bank book is balanced on the 31st of 
December and shows that. 

Q. It is easy enough to show how much was in course of trans- 
mission, was it not ? A. Yes, sir; because the book will show that. 

Q. Then why is it not as easy to give each one separate ? A„ 
Well, it would be. 

Q. It would be just as easy to give them separately as to couple 
them together, would it not? A. Yes, sir. 

Q. Have you any idea of the amount deposited in the bank on the- 
31st of December, 1876? A. I could not say without looking at the- 
books. 

Q. Can’t you approximate to within $100,000? A. No, sir; I 
will not attempt it; I can send it to the committee if you want it. 

Q. Can you give an idea of the amount in course of transmission ;; 
A. No, sir. 

By Mr. Moody : 

Q. You do not have the personal supervision of that part of the- 
business, I suppose, do you? A. No, sir; it comes through the 
cashier; still I know all about it. 

By Mr. Moak : 

Q. You know how much money your company had from all these 
three sources on the 31st of December, 1876, do you not? A. No, 
sir; not on that day I don’t; that is, I don’t know how much was 
received that month. 

Q. Can you give an idea ? A. No, sir. 

Q. Can you give an idea how much more they had on the 1st of 
January, 1877, than on the 1st of December, 1876? A. No, sir. 

Q. Is it not a fact that the amount of cash from these sources was 
very much in excess of the amount received than in any other month 
in the year? A. No, sir; I should guess it was about the same; the 
only difference would be that in that month we have more collec¬ 
tions than any other. 


215 


Q. They do not vary very much in the collections except in the 
summer months, do they ? A. The last two months in the year are the 
heaviest; we have the interest on our bonds and mortgages coming 
in, which increases our assets. 

Q. Was it your company that had the $64,000 forged draft in con¬ 
troversy here last winter ?" A. Yes, sir, it was. 

Q. How much was drawn out of the bank, say within the first 
fifteen days of January that was on deposit? A. That I cannot 
tell. 

Q. Was not a very large proportion of it drawn out within fifteen 
days ? A. There was no violent change made at all. 

Q. That don't quite answer my question ; my question is whether 
there was not quite a large proportion of it drawn out within the 
first fifteen days of January ? A. I don’t think there was. 

Q. Have you any means of determining that? A. The books will 
show it to a cent. 

Q. And what it was drawn out for? A. Yes, sir. 

Q. Does this $1,427,933.18 represent the amount of cash actually 
in the office and in the banks, and in course of transmission ? A. It 
did to a cent, exactlv. 

Q. Was there any such thing done just before the first of January, 
as drawing on the agents of the company and having the amount 
drawn for credited to the company ? A. No, sir, never at that time 
or at any other; never in any way, shape, form or feature. 

Q. There was no amount credited in the bank; in other words, 
except what the company had actually received in cash ? A. Not a 
cent in any way, shape or manner. 

Q. Was there any compromise made of this $64,000 draft? A. 
Not at all; we have got the money for it. 

Q. You have got the money for it; what do you mean? A. Why 
the company charged it to us first and then paid it back. 

Q. Did not your company directly or indirectly pay any portion 
of that $64,000? A. Not a cent, sir. 

Q. Nor allow any thing on it? A. We never allowed any thing 
on it in any way, shape or manner, either directly or indirectly. 

Q. There was no compromise on it? A. No, sir, not in any way ; 
we got the full amount put to our credit. 

By Mr. Moody : 

Q. Do you have a monthly statement showing how much you have 
received at the end of each month? A. Of certain portions of the 
business we do ; we could not balance up the books and get the stand¬ 
ing of the company each month, but we do certain books. 

Q. How often do you balance your books ? A. Once a year; at 
the end of each year. 

Q. Only once a year ? A. Only once a year. 

By Mr. Moak : 

Q. Are you in any way connected with any other corporation of 
any kind—either fire, life, marine or any other kind whatever? A. 
I am a director in one company. 



216 


Q. What company? A. Farragut Fire Insurance Company. 

Q. Do you hold stock in it ? A. I do, sir. 

Q. How much ? A. Two thousand five hundred dollars. 

Q. How much is the entire stock of the company ? A. Two hun¬ 
dred thousand dollars. 

Q. How long have you been a director of that ? A. Ever since 
its organization. 

Q. When was that ? A. That I don’t recollect; several years 
ago. 

Q. How long have you been a director ? A. I told you ever since 
its organization. 

Q. Has it been organized, say within the last eight years? A. I 
think it has. 

Q. Do you hold any office in that company, except director ? A. 
Nothing. 

Q. Who are the present officers of the company? A. Mr. Fur¬ 
man is president, Mr. Leffingwell vice-president , and Mr. Darbee 
secretary , as I remember it. 

Q. Has your compan}^ loaned money on bond and mortgage ? 
A. Yes, sir. 

Q. Is that one of the companies in which the policies are issued 
as collaterals for loans? A. Yes, sir ; they are tenants of ours. 

Q. Tenants in your building ? A. Yes, sir. 

Q. Can you tell to what extent their policies are issued as col¬ 
laterals to loans ? A. 1 cannot , sir. 

Q. Can you give any idea ? A. No, sir, I cannot; there is 
another company in the building also—the Franklin ; they have 
business from us, too. 

By Mr. Moody : 

Q. The Franklin of this State? A. Yes, sir. 

By Mr. Moak : 

Q. You cannot give the slightest idea of the amount of policies 
which your company holds as collaterals of this Farragut company? 
A. I cannot. 

Q. Are there any other officers of that company connected as 
directors or officers or otherwise or stockholders of this Farragut 
company ? A. I don’t know that there are; I have no knowledge 
of it at all. 

Q. Have you any information? A. No, sir. 

Q. Of what insurance company does your company hold the largest 
number of policies as collateral ? A. Well, I should think the Far- 
ragut, sir. 

Q. How many companies has your company policies in? A. We 
have a list of about ninety. 

Q. What proportion of the entire insurance in your opinion is in 
the Farragut ? A. I could not give you any information on that 
point. 


Q. Well, is one-fifth of it in the Farragut, in jour opinion ? A. 
Well, I shouldn’t like to state that, sir. 

Q. Well, give us jour best judgment about it ? A. Well, I should 
think one-fifth of it might be there. 

Q. What one has the next largest amount? A. Well, I couldn’t 
tell jou, sir; I don’t know ; we have a list of about ninety, and we 
let them choose their companies; but we recommend, of course, our 
own tenant *, because thej paj us rent. 

Q. Have jou anj connection either as stockholder, trustee, direc¬ 
tor, or otherwise, with anj other corporation of anj kind, except 
this Farragut Insurance Companj ? A. I have not, sir. 

Q. Who is the cashier of jour companj ? A. Mr. Banter. 

Q. What is his first name ? A. Theodore. 

Q. How long has he been cashier ? A. Well, I think he has been 
in the companj about fifteen or sixteen jears. 

Q. Commencing with the officers of the companj, how much is 
the salary of your president? A. Twenty-five thousand dollars. 

Q. How long has that been his salary? A. Several years. 

Q. Well, for how many? A. I should think five or six years. 

Q. What was his salary previous to that? A. If I recollect right, 
it was $15,000. 

Q. In addition to this regular salary of $15,000 and $25,000, did 
he ever receive a per centage ? A. Do you mean on the business, 
sir? 

Q. Yes? A. No, sir. 

Q. Not any thing ? A. No, sir; there never has been any per 
centages since I have been there. 

Q. Did he ever receive any additional salary from any source or 
on any pretext? A. He received a bonus; I want to make a dis¬ 
tinction in that, because I know there has been some talk about per 
centage. 

Q. Say within ten—what has he received annually in addition to 
this $25,000, and $15,000, of which you speak? A. For the last 
five years he has received twenty-five per cent; previous to that for 
three years he did not receive any thing. 

Q. And previous to that ? A. Previous to that I think he received 
twenty per cent. 

Q. On his salary ? A. On his salary. 

Q. How much has your vice-president received during the first 
ten years? A. I received just about as much as the president. 

Q. As vice-president, actuary and secretary ? A. \ es, sir. 

Q. Do you mean actually the same ? A. 1 es, sir; actually the 
same. 

Q. Have either of you received any other money for any purpose, 
or rather alleged purpose for services, during the past five years ? 
A. None whatever. 

Q. How many assisting actuaries have you ? A. Not any. 

Q. Have you' any persons who perform the duties of actuary ? A. 
We have two or three mathematicians in the office. 

Q. I ask you have you any persons who perform the duties of 
actuary of the company? A. No, sir; I perform the duties myself. 


218 


Q. Have you any one that assists you? A. Yes, sir; I say we 
have two or three mathematicians. 

Q. Well, how many have you of them? A. Two or three. 

Q. Do they perform any thing else in any duties but as mathe¬ 
maticians ? A. Any thing they are called upon to do. 

Q. My cpiestion is, do they perform any other services ? A. I 
cannot tell whether they are called upon to pefonn any other services 
by the heads of departments. 

Q. Then you don’t know? A. No, sir. 

Q. Well, how many have you ? A. There is the head and he has 
assistants. 

Q. That is two ; how many have you in the department ? A. Ten 
or twelve in the department, I suppose we have, working at figures 
all the while. 

Q. How much are they paid ? A. I sent you a statement; I think 
the average is $1,200 a year. 

Q. How much is the highest salary paid to any of them ? A. The 
highest, I think, is $5,000. 

Q. That is the highest? A. Yes, sir. 

Q. To whom is that paid ? A. To the principal men in the de¬ 
partment. 

Q. What is the next highest salary paid ? A. I think the next 
gets $3,000. 

Q. The next highest? A. They run from $2,000 down to $600. 

Q. They are, in all, how many ? A. I think ten or twelve. 

Q. What is the aggregate of the salaries paid in the department? 
A. That I could not tell you. 

Q. About how much ? A. I could not tell you; I sent up the 
statement by the president. 

Q. You sent up the statement in gross; can you tell how much is 
paid in the department? A. No, sir. 

By Mr. Weiant : 

Q. You are speaking now of the actuary’s department? Yes, 
sir. 

Q. And you cannot give us the salaries paid in the department ? 
A. I cannot tell you exactly. 

Q. You cannot approximate to it? A. I would not like to do 
that. 

By Mr. Moak : 

Q. What other officers have you besides the president and vice- 
president ? A. None at all. 

Q. None at all ? A. No, sir. 

Q. Have you any statement in this return to the Insurance De¬ 
partment of the salaries paid to the officers ? A. It is in the state¬ 
ment. 

Q. Where is the statement of the salaries paid to the officers and 
employes and all? A. I think this is what you want; it is $167,000. 

Q. Does that include the president’s salary? A. Yes, sir; it 
includes everv tiling. 


219 


Q. The aggregate expenses for salaries and other compensation for 
officers and other employes is $167,659.78 for 1876? A. Yes, sir. 

Q. That would include the $62,500 paid to other employes other 
than president and vice-president? A, Yes, sir; and for traveling 
men and all; all the salaries. 

Q. How many tr weling have you ? A. Sometimes we have two, 
sometimes half a dozen; it depends altogether upon the business. 

Q. How many have you averaged during 1876 ? A. It might be 
half a dozen. 

Q. How many do you think you had, according to your best judg¬ 
ment ; do you mean that you did have that number? A. Ho; I do 
not think we did. 

Q. Well, I want you to give the number as nearly as you can ? A. 
We might have had a-half a dozen. 

Q. Do you think you had? A. Yes sir, that is,what T mean. 

Q. How much were their salaries, independent of expenses ? A. 
Well, they range from $2,500, up to I think the highest is $5,000. 

Q. That is exclusive of traveling expenses? A. That is exclusive 
of traveling expenses ; yes sir. 

Q. How much was paid approximately for traveling expenses to 
all of them ? A. To the average I suppose six dollars a day ordinary 
traveling expenses. 

Q. But that covered the aggregate of their traveling expenses 
during the year ? A. I think six dollars a day would, sir. 

Q. In other words, it would be traveling expenses exclusive of 
salaries, about thirty-six dollars a day the year round ? A. Yes, sir; 
I should think it would. 

Q. What are the duties of these men? A. Well, it was to look 
after the agents and their accounts and to attend to their business 
generally that came up ; to look after the business of the company 
in various ways. 

Q. Have you an office at Boston ? A. Yes, sir. 

Q. And one at Chicago ? A. Yes, sir. 

Q. Where are your principal offices in the United States ? A. 
Boston is one, Chicago is another, St. Louis is another, Cleveland is 
another; those are the principal ones. 

Q. Who does the largest amount of business ? A. Do you refer 
to the new business or business on the books. 

Q. 1 mean bu siness on the books ? A. I think the Boston agency 
is the largest. 

Q. Do you own the building in Boston ? A. We do not. 

Q. Do you hire the offices? A. We hire the offices. 

Q. How much rent do you pay in Boston? A. I think it is 
$2,500. 

Q. Rent ? A. Yes, sir. 

Q. Do you furnish the office in addition ? A. Yes, sir. 

Q. How much salary do you pay the general agent? A. We do 
not pay him a salary. 

Q. Ilow much per centage do you pay your agent? A. We have 
no lixed rule about it; we pay to some one per centage and to others 
not so much. 


220 


Q. Well, about what is the average ? A. We try to bring all our 
business down to about twenty-five per cent of the first premiums, 
and four renewals at ten per cent. 

By Mr. Weiant : 

Q. What is the largest per centage that you do pay ? A. There 
are various kinds of commissions; which kind of commission do you 
mean ? 

Q. Commission to the agents I mean ; what is the highest you pay 
from the premium received ; when the premium comes in the hands 
of the company how much is paid out of it for commissions ? A. 
The highest is twenty-five per cent with an allowance of expenses of 
five per cent. 

Q. That is thirty per cent in all ? A. Yes, sir ; but your question 
don’t cover the point. 

Q. I want to know how much comes out of the premium before 
it gets in the hands of the company ? A. Well, that is it as I have 
given it you. 

Q. Then they have ten per cent on four renewals ? A. Yes, sir. 

Q. That is ail? A. Yes, sir. 

Q. Do you allow any thing for collections ? A. Yes, sir. 

Q. How much is that ? A. Two per cent and one per cent; but 
not to exceed two per cent 

Q. About how much has been the annual income of the agent at 
Boston, say for the past five years, from all sources ? A. I think it 
would average about $600,000. 

Q. Per year? A. Yes, sir. 

Q. How much would be the amount received by the agent in Chi- 
eago ; you have one at Chicago? A. Yes, sir. 

Q. Is that the next largest ? A. I think the department in Mich¬ 
igan is the largest. 

Q. Is that office at Cleveland? A. Ho, sir ; the head-quarters of 
that is in Chicago. 

Q. Well, take the Chicago office, including the Michigan depart¬ 
ment, how much has been the receipts of the agent there, say for 
the last five years ? A. I should think it might be three hundred or 
three hundred and fifty thousand dollars. 

Q. What was the aggregate amount of per centage received by all 
of those agents during the past year ? A. I have not the slightest 
idea. 

Q. Can’t you give any idea? A. Yes, sir ; I could if I looked at 
the books; you don’t suppose I carry them all in my head, do you ? 

Q. I ask you to approximate, if you cannot give the exact figures? 
A. Well, I cannot approximate it. * 

By Mr. Moak : 

Q. You say you cannot give an approximate idea of the amount 
received by the agent at Boston or Chicago ? A. Ho, sir, I could not. 

Q. You cannot give within $100,000? A. Yes, sir; I could. 

Q. Well, approximate it ? A. Well, I cannot do it. 


221 


Q. About what has been the annual receipts of the St. Louis 
agency for the last live years? A. Well, I think they took in about 
$125,000 for that business there. 

Q. Lou mean that is what they received? A. Yes, sir. 

Q. Lou mention one at Cleveland; about what is the Cleveland 
branch receipts ? A. I guess one hundred and fifty or two hundred 
thousand dollars; I can oidy give you the approximate figures. 

Q. Who was the agent at Boston ? A. Stocking A Austin are 
the agents. 

Q. Plow long have they been agents ? A. About four years or 
five, I think. 

Q. Previous to that, who was the agent ? A. D. AY. Russell. 

Q» Was D. AY. Russell connected in any way with any of the 
offices of the company ? A. In what way ? 

Q. I mean connected in any way—related ? A. No, sir. 

Q. Not in any way ? A. No, sir. 

Q. AYas he connected in business with any of them ? A. No, sir, 
not to my knowledge; he was not connected with any of them. 

Q. These two men, Stocking and Austin, are either of them con¬ 
nected in any way with either of the officers ? A. No, sir ; I don't 
think we have an agent that is. 

Q. AYere they connected in business in any way with either of 
them? A. No, sir. 

Q. Do they have any business in any way, except as agents of the 
company ? A. No, sir. 

Q. Do they have any connection with any other company to your 
knowledge? A. Yes, sir; I think the Boston agency carries risks 
for the Mutual Life; if they have an application for more than we will 
take they take it to another company. 

Q. Do you know to what extent ? A. I do not. 

Q. You do not know any thing about it? A. No, sir. 

Q. You do not know from their reports whether they receive more 
or less risks for any other company than yours ? A. It is presumed 
we get the most of them. 

Q. Do you know from any reports they sent you in ? A. No. 

Q. You received no reports from them stating what they do for 
any other company? A. No, sir. 

Q. And you make no examination for the purpose of determining 
that? A. No, sir. 

Q. About what per cent of the amount of premium is allowed in 
your company ? A. It varies upon different tables from— 

Q. Give each table separately ? A. From twenty to forty per 
cent. 

Q. Give the different tables of variation ? A. If you take the net 
premium the tables would show exactly what the variation is. 

Q. How many different kinds of policies have you? A. AYe have 
the ordinary life and the endowment; those are the two classes; then 
there are subdivisions in the classes for different parties. 

Q. The endowments are payable at a particular time i A. A. es, 
sir. 

Q. AYell, take the ordinary life; suppose a person is insured and 


222 


the premium is $200, how much of that is loading ( A. I can illus¬ 
trate it better than that. 

Q. You can state that, can’t you ? A. We do not load on the 
gross premium, but on the net premium. 

Q. What do you call the net premium ? A. The net premium is 
the term we use to express the actual cost of the insurance. 

Q. You can give us how much is the loading on the aggregate 
premium, can’t you? A. Yes, sir, the $100 net premium the load¬ 
ing on that is— 

Q. No, I am speaking of the aggregate premium ; supposing it is 
$200, I ask you what the loading is upon that? A. Well, about 
sixty dollars. 

Q. About what would be the net premium of $200 ? A. About 
$ld0 perhaps. 

Q. How would you arrive at the net premium ? A. By the mor¬ 
tality tables. 

Q. You would not call the net premium the amount of premium 
less the agent’s fees ? A. No. 

Q. You would not call the net premium the amount paid into your 
company after the expense of putting it into the company's office 
had been deducted ? A. No, sir. 

Q. You would arrive at it in another way ? A. Yes, sir. 

Q. How much would be the premium that came into the office 
after deducting the agent’s commission? A. Well, you take $200 
and deduct thirty per cent, it would be about $140. 

Q. Would that be the net premium, as you term it ? A. No, sir. 

Q. Well, how much would be the net premium? A. Well, those 
two things would be the same. 

By Mr. Moody : 

Q. You proposed to give an illustration ; let us have it ? A. For 
instance, the net premium on a policy or the actual cost to the com- 
panys of insuring a man according to the tables would be $100 a 
year on a certain sum; we load that forty per cent, and that would 
bring it to $140 ; that is what we call a loaded premium ; the net 
premium is what we start with. 

Q. That is what you call the reserve, is it ? A. Yes, sir. 

Q. The net premium and the reserve is the same thing ? A. Now 
you have it. 

Q. Well, about what would be the reserve on a premium of $200, 
say at forty-five, or let me put a case which will illustrate it; sup¬ 
pose a man is forty-five years of age, insures for $5,000 on the or¬ 
dinary life plan, about what would be the annual premium to the 
company ? A. I couldn’t give you that unless the tables were placed 
before me. 

Q. As an actuary, you can give it pretty nearly, can’t you? A. 
It is published in the books. 

Q. You ought to have some idea of it ? A. No, I have not. 

Q. You could give, say the substance, I suppose—approximate the 
cost ? A. No, sir, I wouldn’t undertake to do it. 


223 


Q. Well, could you not give within fifty dollars? A. No; I tell 
you I wouldn’t undertake to. 

Q. Could you not give it within $100 ? A. It is foolish to talk 
that way. 

Q. It is not foolish because you are an actuary, and you should 
know ? A. 1 es; but I am not able to carry the figures in my head. 

Q. Can’t you give us what the premium would be? A. No, sir; I 
can’t undertake to do it. 

Q. Would it cost $100? A. Yes, sir. 

Q. Would it cost $200? A. I cannot say; if you will send down 
to the agency here and get me one of the books I will answer your 
question. 

Q. Can't you give an approximation of the annual premium at 
forty-five years of age on $5,000 ? A. No, sir; I cannot. 

Q. Well, we will suppose it to be $200, about what would be the 
reserve you would set apart? A. About two-thirds of the premium. 

Q. At forty-five years of age? A. Yes, or at any age. 

Q. Your usual rule is to set aside about two-thirds of the premium 
as reserve? A. Yes, on ordinary life. 

Q. IIow manv new policies did your company issue last year? A. 
6,455. 

Q. Six thousand four hundred and fifty-five new policies ? A. 
Yes, sir; new policies. 

Q. Now in that do you include policies that were surrendered and 
new ones issued as paid-up policies; suppose a man surrendered a 
policy and took up a paid-up policy, do you include that in the 6,455 
as new policies? A. Yes, sir, of course, because it is a new policy. 

Q. Well, how many were there of that kind out of that number ? 
A. Nine hundred and seventy-one. 

Q. Then 9T1 of those 6,455, were paid-up policies ? A. Issued in 
lieu of life policies. 

Q. Can you state the amount of reserve on those policies ? A. No, 
I cannot, sir. 

Q. Can you approximate to it ? A. I could not. 

Q. About what would they average in amount ? A. It would 
average about thirty per cent of the original policy. 

Q. About what ? A. About thirty per cent. 

Q. That is a paid-up policy ? A. Yes, paid-up policies average 
about thirty per cent of the original amount. 

Q. About what time do they run; would they average one, two, 
three or five years, or ten ? A. The average time on these policies 
that the original policies were in force, would be five and three- 
fourths years. 

Q. Ton say they would average about thirty percent of the origi¬ 
nal policy ; for instance, if the original policy was $5000, they would 
average about $1500 ? A. Yes, sir. 

Q. Then the other seventy per cent would go somewhere else ? A. 
The paid-up policy would take up all the reserve. 

Q. All the reserve of those policies? A. Yes, sir; because it is 
expressly stipulated in the policy for a paid-up policy in our company. 


224 


Q. In what way? A. That they shall have so much insurance in 
so many payments, and that takes about all the reserve. 

Q. On those policies? A. Yes, sir. 

Q. What is the stipulation you have in your policies, that is differ¬ 
ent from others ? A. I am sorry I have no policy with me ; I can 
give you an instance—say we had received ten payments on a life 
policy, or so the payments on the policy were complete in ten annual 
payments, if the man stops any time after two years, he is entitled 
to a proportion for just what he has paid. 

Q. Then, after two years, he would be entitled to two-tenths ? A. 
Yes; and three years, three-tenths ; four years, four-tenths, until it 
was paid up; the reserve, what we had on hand when he stopped, is 
just about sufficient to give him a paid-up policy, so he loses nothing. 

Q. Does that apply not only to the ten-year policies, but to the or¬ 
dinary life policies ? A. Hot in the same manner. 

Q: Take the ordinary life policies, what provision do you make ? 
A. The provision has been, to give them the amount of paid-up 
insurance equal to the amount of premiums paid and received by 
the company. 

Q. I do not quite get your meaning there ; now, suppose a man has 
paid in three years $500 ? A. He is entitled to a policy for $500, 
payable at his death; but it is provided in that, that it must be 
between the ages of fifteen and forty-five, as we have not reserve 
enough to do it after that age. 

Q. Then the amount of his paid-up policy would be what he has 
paid in at the time of the surrender? A. Yes, sir; he would receive 
a paid-up policy payable at his death. 

By Mr. Wei ant: 

Q. What would be the annual premium on an endowment policy 
on $5,000, say at the age of forty-five. A. I could give it to you if 
I had the tables. 

Q. Can't you give it without those tables? A. No, sir; all the 
policies of our company have stipulations in them with reference to 
the surrender policies. 

By the Chairman : 

Q. Do you know of any other company in New York, except 
your own, that has express stipulations for a paid-up policy in their 
policies? A. I do not; ours are the only policies; some have in 
certain kinds of policies and not in others; we have it in all of 
them ; there are no stockholders, and there is no object to take any 
thing from one policyholder and give it to another; we never make 
any money by that kind of business, and it is not to the interest of 
the company. 

Q. Do not your policies have also annexed to them a copy of the 
application^ A. Yes, sir; I originated that system myself. 

Q. They do ? A. Yes, sir ; every one of them. 

Q. Do you know of any other company that does that in this 
State ? A. I do not, sir. 


225 


Q. Do you know if the Connecticut Mutual does? A. I don’t 
think they do, sir. 

By Mr. Weiant : 

Q. Do you say in all the policies you have a condition by which 
the policyholder is entitled to a paid-up policy? A. Yes, sir. 

By Mr. Moak : 

Q. How many policies lapsed in your company last year ? A. Two 
thousand eight hundred and twenty-three. 

Q. How many lapsed by death ? A. Five hundred and fifty- 
seven. 

Q. And how many by non-payment of premium ? A. That is 
what we term lapsing by non-payment of premium. 

Q. But there is a difference between lapsing; by the term lapsed 
you mean all policies that cease to pa y premiums ( A. Yes, sir. 

Q. Well, how many were there that lapsed by death ? A. Five 
hundred and fifty-seven ; they were all lapsed, but not as we under¬ 
stand it. 

Q. You do not call those lapsed that lapsed by death of the par¬ 
ties? A. No, sir; we call them dead. 

Q. What do you call lapsed ? A. By the non-payment of the 
premium. 

Q. How many were there of those? A. Two thousand eight 
hundred and twenty-three. 

Q. How many were renewed? A. Of that 2,823 I could not tell 
you, because they will come in during this year. 

Q. Well, how many were renewed during the year? A. None of 
the 2,823 ; they have to come in this year. 

Q. How many were renewed during a year of previous years ? 
A. Of those that lapsed of previous years , and of old policies revised 
during this year, there are fifty-nine. 

Q. Would that be about the average of those that were revived 
each year? A. Well, yes, I think it might be taken as a fair 
average. 

Q. Of the 2,823 for how many were paid-up policies issued? A. 
There were no paid-up policies issued on those; none of them have 
run a sufficient time, except about 800, to entitle them to a paid-up 
policy. 

Q. And none of the 800 applied for a paid-up policy ? A. They 
did not at the end of the year ; they have three months to apply in 
on an ordinary life, and a year in case of limited payments. 

Q. What do you mean by limited payments? A. Well, payments 
that conclude in a certain number of years. 

Q. How much was the aggregate amount of those that lapsed ? 
A. Seven million seven hundred and forty thousand one hundred 
and fifty-eight dollar. 

Q. That was the amount of the insurance? A. Yes, sir. 

Q. And the reserve would be about two-thirds of that, you say ? 
A. Oh, my conscience, no, sir. 

15 


Q. Well, liow much would be the reserve? A. It would not be 
over $200,000. 

Q. The reserve of all of them would not exceed $200,000 ? A. 
No ; I could give you the figures. 

Q. You think the reserve of $7,740,158, would not be over 
$200,000? A. Let me explain ; 1,500 did not run a year and there 
is no reserve; 500 did not complete two years, and about 300 more 
of them did not complete three years, so that there is not over 600 
that would be entitled to any thing at all. 

Q. How long have they to run to entitle them to a paid-up policy ? 
A. In a case of limited payments, two years; in a case of ordinary 
life, three. 

Q. Have you any idea of the cause of these lapses; how great a 
proportion of those policies that lapsed really were taken for tem¬ 
porary purposes, as a rule ? A. Well, they do not usually represent 
what we term bona fide insurance; we do not issue what are called 
temporary policies—that is, term policies; a man will come to the 
company and take an ordinary life for one or two years, and the 
purpose being subserved, he lets it go ; that accounts for the large 
number that went out in less than three years; of the 2,800 there 
are 1,500 that went out in less than one year. 

By the Chairman : 

Q. For what purpose would t hey take the policy ? A. For busi¬ 
ness purposes; for instance, if a man is traveling to Europe he would 
come in and take a policy for six months or a year; he might do it 
for a variety of reasons. 

Q. Can you form any estimate of those who allow them to lapse 
by reason of financial difficulty? A. Well, I don't think 1 can 
hardly give any opinion about that, sir. 

Q„ Well, how many would lapse by reason of their being in good 
health and not needing it ? A. It would be very difficult to say, 
sir ; you will notice, from what I have said, that the policies which 
have run for three years do not go out very fast; a policy that runs 
up to three years is allowed to run out very seldom; they are taken 
for legitimate purposes and do not go out. 

Q. 1 supposed the reason might be given to you at the time by 
the parties who failed to make the subsequent payments? A. No, * 
sir; of the 1,500 I don’t suppose we see one of them; they took a 
policy out and pay up the premium for six months or a year and 
that is the end of it. 

Q. Of that proportion, do you know, whether it is good lives or 
pool 1 ones that lapse? A. The presumption is they are good lives. 

Q. Then the presumption would be they are allowed to lapse 
from inability to pay the premium as they were good lives ? A. 
Well, hardly ; if parties are in poor health they will generally strive 
somehow or another to keep ifp their policies. 

Q. Might they not be in financial difficulty? A. Yes; but even 
if they are, if a man has a policy in a life insurance company, and 
he is in poor health, he will generally find friends enough to help 


227 


him out; with reference to lapse policies, I can give you tlie rules 
of the company in regard to it. 


By Mr. W eiant : 

Q. Was not the vast majority of policies that lapsed allowed to 
lapse because of the inability of persons to pay premiums ? A. I 
don’t think so, sir. 

By Mr. Moak : 

Q. How many expired during the past year by reason of death ? 
A. Five hundred and fifty seven—insuring $1,622,875. 

Q. Was that the amount actually insured? A. That was the act¬ 
ual insurance. 

Q. How much was paid to the persons ? A. The full amount of 
the policies 

Q. In every case ? A. In every case. 

Q. Were there not cases in which less than the amount of the 
policies was paid ? A. Not that I know of; I know of no reason 
why there should be. 

Q. You know that there were not any ? A. I have no recollection 
of them; there might have been one case, perhaps. 

Q. How many cases during the past year has your company dis¬ 
puted of the 557 ? A. I can tell you that not more than one, I 
believe. 

Q. In case of a loss, we will say a man has a policy of $5,000, and 
he dies, and proper proof of his death is given, when you pay it do 
you pay it by check ? A. By check. 

Q. By whom is it usually signed ? A. By the president and vice- 
president. 

Q. Who settles whether the loss is to be paid or not ? A. The loss 
committee. 

Q. Of how many does that consist ? A. Five. 

Q. Who was the committee in your company ? A. The president 
ex-officio , William A. Boo, Robert B. Collins, C. R. Bogart, and I 
forget the other names for the moment. 

Q. How many committees has your company, take them all 
together? A. We have four committees; the finance committee, 
the loss committee, the supervisory committee, and the audit com- 
mitttee. 

Q. How often do they meet ? A. The finance committee meets 
every month ; the loss committee every month ; the supervisoiy 
committee, whenever it is deemed necessary to call them. 

Q. About how often is that ? A. Twice a year or once a year, 
just when any thing comes up ; they generally meet at the call of 
the committee, but we sometimes talk with some of them. 

Q. Well, about the other committee ? A. The audit committee 
meets once a year and goes all over the books. 

Q. When a loss is paid and a check is given for $5,000, you 
say that it is signed by the president and vice-president ? A. Yes, 
sir. 


228 


Q. To whom is it payable ? A. To the beneficiary under the 
policy ; if a wife, in all cases, to the order of the wife. 

Q. And if to the executors or representatives ? A. We have very 
few of them. 

Q. Most of them are in favor of the wife or children ? A. Y es, 
sir. 

Q. Is the check issued, in all cases, for the full amount of the loss 
to those parties ? A. Yes, sir. 

Q. And sent to them? A. Yes, sir. 

Q. Are there no cases that are compromised and a less amount 
paid than the amount of the claim; have there not been such cases 
in the past year; how many claims have been compromised for a less 
amount? A. I don’t think a single one, sir, is mentioned in the 
paper; I asked them to give me that information, but I find there is 
no information of that sort given here, and, therefore, I don’t think 
there was a single case. 

Q. Are those checks drawn to the beneficiary sent directly to the 
beneficiary or to the agent to be delivered ? A. Generally sent to 
the agent. 

Q. To be delivered ? A. Yes, sir, when the money is to be paid 
out of town. 

Q. Does the agent retain any thing upon them ? A. He is not 
allowed to, sir. 

Q. That is not an answer to my question ; he may not be. allowed 
to, but do you know whether he does or not ? A. I am sure they 
do not; if they did, and we knew it, we should dismiss that man 
immediately after we knew it. 

Q. How much w T as paid in the aggregrate by your company during 
the year for death policies ? A. The total amount paid for losses 
and matured endowmeiits , was $1,635,938.92. 

Q. That is on policies of all classes? A. Yes, sir. 

Q. I am requested to ask you by a gentleman of the committee 
what proportion of the policies —how many policies during the last 
year that were allowed to lapse that have run three years, and that 
entitled them to a paid-up policy ? A. About seven or eight hundred 
and those were the only cases in which they were entitled to receive 
them. 

Q. For the single reaso n, I suppose, that they had not paid up a 
sufficient number of prem iums to entitle them to it ? A. That was 
the single reason ; there was about 600 in all. 

Q. About 600 entitled to a paid-up policy ? A. Yes, sir. 

Q. At the end of the year they had not applied for one ? A. Ho, 
sir; some of them have a year in which to apply, some of them three 
months. 

Q. Take the year when there were 600 policies of that kind; how 
many on the average apply for paid-up policies, what proportion of 
them ? A. Well, either for a paid-up policy or a cash surrender; 
they all generally come in for one or the other. 

Q. Well, how many of them, I ask you? A. Well, I should think 
seven-eighths of them would come in for one or the other. 

Q. For cash surrender or paid-up policy ? A. Yes, sir. 


229 


By Mr. Wei ant : 

Q. Can you tell about liow many policies were forfeited year before 
fast ? A. No, sir, I cannot. 

Q. Can’t you tell us whether it was about the same as last year? 
A. No, sir. 

Q. Can you tell us about how many paid-up policies were issued 
'last year ? A. I cannot. 

Q. For policies forfeited a year previous, I mean ? A. No, sir. 

Q. I want to get at the practice of the company; your company 
has a provision in the policy that entitles all to a paid-up policy; 
that is the theory; I want to know what the practice is ? A. We do 
just as we agree to. 

Q. Sometimes policies are in a queer shape ? A. There are no 
queer policies in our company. 

Q. I wish you would give us the different forms which are em 
bodied in the policy, and we will put it in as part of the evidence; 
have you any blank policies here ? A. I have no blank policies here, 
and I don’t know how you will get them here. 

Q. Well, has not your agent here a blank policy? A. No; he 
may have a policy that has been issued. 

Q. Have you no blanks at all ? A. No, sir, we don’t allow any 
blanks to out of the office. 

O 

By Mr. Moak : 

Q. By referring to the report of 1875, it would show what the 
condition of the policy was for that year , would it not ? A. Yes, 
.sir. 

Q. Well, here it is: “ New policies issued during the year, 5,477” 
—endowments so much; the experience each year is about the same 
as the other? A. Yes, sir; there is no difference. 

Q. The number of policies is also shown that were in force dur¬ 
ing the year; then it goes on, “ terminated by death, 528; by 
expiration, 58; by surrender, 725 ; and by lapse, 2,652 ; not taken, 
823;” have you any means of telling us how many you issued 
paid-up policies for ? A. I think on the average it would be the 
same as on previous years ; there were about 800 that were not en¬ 
titled to it and did not get it. 

Q. How many of those were there that were entitled to it ? A. 
About seven-eighths, I suppose. 

Q. About what would be the average reserve on those 800 pol¬ 
icies? A. I couldn’t give you that; some of them might have run 
for twelve years, and some less. 

Q. Well, give us the average? A. I don’t know the class of pol¬ 
icies, and unless I know that I cannot give it you. 

Q. Can you approximate what the average reserve would be of the 
800? A. No, sir, I couldn’t, but if you require them, I will send 
you the exact figures. 

Q. Of the 2,652 that lapsed , what would be the reserve of those ? 
A. I gave the estimate of those at about $150,000 or $200,000. 

Q. Now of the 800, could you not tell the amount of reserve of 
those, approximately ? A. No, sir, I could not. 


230 


Q. They would be more in proportion than the others ? A. I think 
they would. 

Q. You have got here policies that lapsed by expiration ; are those 
endowments that become due during the year? A. Part of them; 
but then, for instance, a man takes out a policy for two years, that 
we would call a term policy, which runs out of its own limitation. 

Q. By surrender you mean those policies which were surrendered 
and a cash value paid for them? A. Yes, sir. 

Q. And the number surrendered during the year was $1,647 
A. Yes. 

Q. And those represent $6,074,838 of insurance ? A. 1 es, sir, 
that includes those who took up paid-ups. 

Q. Not of those surrendered ? A. Y es, those would be surren¬ 
dered. 

Q. Those you put in as new policies, didn’t you ? A. 1 es, sir. 

Q. You don’t put them in twice, do you ? A. No, of course 
not. 


By Mr. Weiant : 

Q. Can you furnish the committee copies of the different policies ? 
A. I have not the slightest objection to furnish you with a copy of 
all the policies, if you require me to do so. 

Q. Well, will you do so? A. I will if the committee request it 
officially; a simple request in writing will be sufficient, or an order,, 
so we may have something on the file to show why we send therm 
out. 

Q. These 1,135 are cases where parties surrendered the policies 
and took their present value. A. Yes, sir. 

Q. Then it w^ould not include paid-up policies, would it? A. That 
includes the whole number surrendered to the company. 

Q. What proportion of those were paid-ups ? A. There is 971 
paid-up, and 676 were cash-surrender value. 

Q. Can you tell what proportion of the reserve those paid-up pol¬ 
icies represented was paid ? A. Yes, they took nearly the entire 
reserve, if not quite. 

Q. The six hundred and odd were paid present cash value, what 
proportion of the reserve of those policies were paid upon them ? 
A. I could give you the amount, sir. 

Q. Well, about what proportion? A. I can’t give the proportion, 
but could give you the amount. 

Q. You could give the amount that was paid, but can you give 
the amount of the reserve ? A. No, sir, I cannot. 

Q. How much was paid on the six hundred odd that was surren¬ 
dered for cash value ? A. It is $1,044,056.46. 

Q. How much would that be apiece ? A. It would average $700 
apiece. 

Q. Do you think they would average that ? A. That is the fact, 
undoubtedly, according to that statement. 

Q. Does it not include all surrendered policies ; you include paid-up 
and surrender in one place, why should you not in another; why 


231 


do you treat as surrender in one place, and not in another ? A. We 
treat it as a surrender in one place because it is a surrender alto¬ 
gether. 

Q. But you put them altogether in that place ? A. No, I gave 
you that for information. 

Q. I understood you say the number given here as surrendered 
includes the paid-up policies ? A. They took a paid-up policy or 
cash surrender. 

Q. Does the million dollars odd include that ? A. Yes, sir. 

Q. Now, can you tell us how much was paid for the six hundred 
odd policies for which present cash value was paid? A. I cannot. 

Q. Can you tell how much the reserve was on the 600 odd poli¬ 
cies ? A. I cannot. 

Q. Can you approximate it? A. No, sir. 

Q. Can’t you give us the slightest idea ? A. No, sir; if I thought 
you wanted it I would have brought it with me. 

Q. The 535 not taken, was any thing paid upon those? A. No, 
sir; except by the agent. 

Q. What do you mean by that? A. When they take out a policy 
and don’t deliver it, we charge the agent five dollars so as to save 
the company from loss. 

Q. Then the company receive from agents $2,675 for those poli¬ 
cies? A. Yes, sir; I see by this return that there were 675 in all; 
it may have been waived in some cases, but that is the rule. 

Q. Your company has no capital stock, and its assets consists ex¬ 
clusively of its reserve? A. Yes, and surplus. 

Q. How much was the reserve of your company at the expiration 
of 1876? A. Twenty-six million four hundred and forty thousand 
one hundred and eleven dollars. 

Q. How much was the surplus? A. The surplus in the company, 
$6,180,977.75. 

Q. How much was the aggregate of the insurance in the company 
on the 31st of December, 1876 ? A. We had $127,748,473. 

Q. Insurance ? A. Insurance. 

Q. Of the assets of the company, of what do they consist; would 
the statement here show it? A. Yes, sir. 

Q. Just give it to me if you please? A. The assets of the com¬ 
pany consists of the cost value of real estate, exclusive of all incum¬ 
brance, $2,541,576.46. 

Q. Does your company own any real estate that was used by the 
company itself, either for offices or otherwise, except your home 
offices? A. No, sir. 

Q. How much was the cost of the home office ? A. One million 
seven hundred and sixty-eight thousand one hundred and seventy- 
four dollars and fourteen cents. 

Q. Of what did the balance of the real estate consist, the $2,500,- 
000? A. Various pieces of property bought under foreclosure. 

Q. Bought under foreclosure within what lapse of time—what 
length of time? A. Within two years; most of it within a year. 

Q. That would be about three-quarters of a million, would it not ? 


232 


A. Seven hundred and sixty-eight thousand dollars I think it was 
last year. 

Q. How much was the amount of the mortgages upon that real 
estate ? A. It would approximate very closely to that, sir. 

Q. Where is that real estate located ? A. In Hew York city, 
§454,700; in Long Island, $8,000; in the State of Hew York, out¬ 
side the city, $50,300; in Elizabeth, Hew Jersey, $34,500; in Hew- 
ark, Hew Jersey, $11,000; that is the total, sir. 

Q. Are you acquainted with the actual market value of any of 
this real estate? A. Hot personally, but from having it examined I 
am. 

Q. From having had it examined, what was its value from your 
examination ? A. It was worth rather more than it cost the com- 
pany. 

Q. Who did you have for to make the examination for the com¬ 
pany; by whom was it made? A. Well, the Hew Jersey property, 
we appointed two men outside the company who went all over and 
examined each piece of property; thoroughly examined each build¬ 
ing and gave us sworn statements of their estimate of the value; in 
Hew York we have a couple of gentlemen whom we had confidence 
in and had the fair appraised value, none of them knowing what the 
company had gave for it; they gave us the value a little more than 
what we had paid for it. 

By Mr. Weiant : 

Q. Who was the statement sworn to by that you presented here 
to-day ? A. By the officers. 

Q. Yourself as one? A. Yes, sir. 

Q. Do you know the facts stated herein to be true to your 
knowledge ? A. As near as any man can who is at the head of an 
institution. 

Q. Do you know it, I ask you? A. You have brains in your head 
as well as I have; how can I know; I take it from the books. 

Q. You are on the stand, are you not ? A. Yes, sir. 

Q. Do you mean to say you have any knowledge ? A. I mean to 
say just what I have sworn to. 

Q. I ask you whether you know ? A. That is my oath and that 
is what the statute requires me to swear to; to the best of my belief 
it is correct. 

Q. Do you, in that statement there, know the facts therein stated 
to be true ? A. True to the best of my knowledge and belief. 

Q. That is not an answer to my question ? A. That is the only 
answer you will get from me. 

Q. I do not mean to say that you state that from your own 
knowledge knowing that you don’t know, but I suppose you don’t 
know a good deal of it ? A. I am not going to give you that 
answer, because there are a great many things that I do actually 
know. 

Q. And there are a great many things that you don’t know; for 
example, the real estate? A. I have given you the basis of my' 
belief, and it ought to suffice for any reasonable person. 


233 


Q. Then you don’t know of your own knowledge? A. I have 
given you a statement. 

Q. If you know it on information you can state it ? A. I have 
given you how I got the statement of the real estate. 

Q. Is it on information ? A. You have got the information. 

Q. Is it not a statement on information and not on knowledge ? 
A. You can put it down just as you please. 

Q. I do not mean to intimate that you are giving a statement here 
that is not correct, but there are some things stated here on informa¬ 
tion necessarily, and others on knowledge; I want to discriminate 
what you know of your own knowledge and what you have from 
information ? A. I have given you all the information I will give 
you. 


By Mr. Moak : 

Q. You say you have $17,354,837.84 loaned on bond and mort¬ 
gage; where is that real estate situated? A. Fourteen million two 
hundred and ninety-six thousand seven hundred and eighteen dollars 
and thirty-three cents in Hew York city; in the State of Hew York 
$1,695,200. 

Q. You mean outside the city; was that exclusive of Brooklyn? 
A. Yes, exclusive of Brooklyn; in Brooklyn, $251,800; in Hew 
Jersey, $643,580.83. 

Q. What per centage of the appraised value do you loan on real 
estate ? A, Hever to exceed fifty per cent. 

Q. Have you any loans that are called call loans, made secure by 
the pledge of stocks or other property? A. Ho, sir. 

Q. Hone whatever? A. Ho, sir. 

Q. You have an item here, “ premium loans and notes on policies 
in force ; ” do you take premium notes ? A. Hot now ; we do not. 

Q. Did you formerly ? A. Yes, sir. 

Q. You have $781,585.39 of those? A. Yes, sir. 

Q. You have here cost value of bonds and stocks owned absolutely 
as per Schedule E, $9,730,729.31; have you any way of stating of 
what they consist ? A. Yes, sir. 

Q. Where is that to be found ? A. Here it is [witness points to 
Schedule E]. 

Q. Do you understand you are authorized to loan and invest in 
this-kind of stock; for instance, bank stock; A. Yes, we are 
undoubtedly authorized to; our charter allows us to do it. 

Q. And the stocks you hold are stated on page 12 of this report ? 
A. Yes, sir. 

Q. The Central Park loan, what is that? A. Hew York city 
bonds. 

Q. And Delaware and Hudson canal stock ? A. Yes, sir. 

Q. That stock is stated at $44,800, at its par value ? A. Ho, it is 
its cost value; there is 840 shares of it. 

Q. What is the par value of it ? A. Sixty-four thousand dollars. 

Q. That is the par value ? A. Yes, sir. 

Q. At what per cent did you compute it ? A. We took it at the 
market rate, sir. 


234 


Q. When ? A.. On the thirty-first of December. 

Q. What is its present market rate ? A. It is about six per cent 
higher; that is forty-four; that was the cash value on the thirty- 
first of December. 

Q. But has it not come down very materially of late ? A. 1 es, 
it has; that is true. 

Q. Its actual cost to the company was $44,800 ? A. 1 es, sir. 

Q. What is its value to-day ? A. Its actual value is about $32,000. 

Q. Then that is estimated at some $12,000 or $13,000 above its 
present market value.? A. Yes, sir. 

Q. These bonds, what are they in the market now ? A. I think 
they are about the same. 

Q. About what ? A. About par; every item you find there agrees 
with the market value on the thirty-first of December, according to 
the stock m< 

Q. These 
A. Yes, sir. 

Q. They are bonds? A. Yes, sir, city bonds. 

Q. Have you any stocks or had you any stocks on December 
thirty-first, except the Delaware and Hudson Canal Company’s ? A. 
No, sir, except the United States stocks. 

Q. I mean stocks of a private corporation ? A. It is the only 
thing we have; the aggregate value of those stocks is over a-half a 
million more than we paid for them ; take them altogether they are 
worth more than half a million than they cost the company, and 
that is what they could have been sold for on the thirty-first of 
December. 

Q. I see here interest accrued on bonds and mortgages; is it the 
same bonds you have been speaking of ? A. Yes, sir. 

Q. That was how much ? A. Two hundred and twenty-four thou¬ 
sand and fifty two dollars and seventy-five cents. 

Q. And these various items here of interest are the interest upon 
the different items specified in Schedule E, and upon the mortgages? 
A. Yes, sir. 

Q. Now, do you furnish to the Insurance Department, in any way, 
or to the public in any way, the names of the persons who sustain 
the loss in your company, and the amount paid to each during the 
year ? A. We publish it monthly ? we have a paper in which we 
give the amount of losses paid. 

Q. And the persons to whom paid? A. Yes, sir. 

Q. And where he resides and the amount ? A. Yes, sir. 

Q. What is that? A. It is called the New York News Letter; 
it comes out once a month, and is published by the company, and is 
sent to policyholders and agents. 

Q. To every one of them ? A. Perhaps not to every one of them, 
but we intend all shall have it. 


rket quotations. 

Jersey city bonds, are you authorized to invest in them l 


By Mr. Weiant: 

Q. You do not publish the names of those whose policies lapse ? 
A. No, sir. 


235 


Q. Or give them any notice? A. We give them notice that the 
premium is due. 

By Mr. Moak : 

Q. The net present value of outstanding policies in force on the 
thirty-first of December is $26,623,287, is it not ? A. Yes, sir. 

Q. Here is the net value of risks reinsured in other companies 
stated at $183,176; do you reinsure in other companies? A. Yes, 
sir. 

Q. To what extent ? A. We never carry but $20,000, and when 
we issue a policy for more than that we reinsure the excess. 

Q. lor instance, if you issue a $30,000 policv, you reinsure the 
$10,000 ? A. Yes, sir. 

Q. I'see you have here “ death losses in course of adjustment, or 
adjusted and not due, $418,393.19 ?” A. Yes, sir. 

Q. Do you mean those were the losses that were then being ad¬ 
justed ? A. No, sir, it includes all the amounts that we are under 
liability to pay ; for instance, a man notifies us there is a death, and 
we immediately put it down as a liability, and do not wait for the 
proof to come in ; that includes policies in cases where the death 
has been proved but have not yet matured. 

Q. The next item I see is “ claims for death losses and other policy 
claims resisted by the company, $97,200?” A. Yes, sir. 

Q. Is that included in the $418,000 odd ? A. JVo, sir. 

Q. It is an addition? A. Yes, sir. 

Q. So, how much of the $418,000 odd may be resisted can’t be 
determined until the future ? A. If there is any chance we put 
it in. 

Q. You say no part of the $418,000 odd will be resisted ? A. No, 
sir. 

Q. Now this $97,200, upon what grounds would you resist? A. 
Well, there was $23,000 of that Southern claims. 

Q. Composed of how many different ones ? A. Five, sir. 

Q. They were resisted upon what grounds? A. Because they 
were forfeited by the war, and have been decided by the Supreme 
Court of the United States in our favor, except that we had to give 
the surrender value of them, which we offered before. 

Q. What was your defense ? A. That the policies lapsed in con¬ 
sequence of the non-payment of the premiums and in consequence 
of there being no agent authorized to take the premiums; we had 
to pay the reserve, which we offered to do before the suit was com¬ 
menced. v - 

Q. What was the balance of it ? A. Then we had $17,000 con¬ 
tested in three cases where the policies lapsed before the death 
occurred. 

Q. What State was that ? A. I don’t know where it occurred. 

Q. How do you mean lapsed; the time for the payment of the 
premiums had expired ? A. Yes, sir, before the death, and some 
insane lawyers took up the case and thought they could make 
us pay it; in these cases $2,000 has already been decided in our 
favor. 


236 


By Mr. W eiant : 

Q. Have they been running long enough to entitle them to a sur¬ 
render? A. Hot at all, or we would have given it at once. 

Q. Do you mean to say they were not entitled to a surrender ? 
A. Ho, sir, they were not; they were clear cases although we put 
them down as liabilities. 

By Mr. Moak : 

Q. How as to the balance ? A. The balance of $57,000 was de¬ 
fended on the ground of fraud. 

Q. How many claims are there in the $57,000 ? A. Seven, sir. 

Q. How many of those are in this State ? A. I don’t believe any 
of them are. 

Q. How much is the largest ? A. The largest one is two policies 
or three. 

Q. Can you give the number of the policies ? A. Ho. I cannot 
give you the numbers; I cannot give you any of the numbers , 
but the total amount of them is $20,700; the smallest one is $2,000. 

Q. Where is the $20,700 policy? A. In Cincinnati. 

Q. That you resisted on the ground of fraud in obtaining the 
policy? A. Yes, sir. 

Q. On the part of whom ? A. The man who got the insurance. 

Q. What was the nature of the fraud ? A. In that case the man 
stated he had been sober and temperate, and he told what was not 
true. 

Q. He stated that in his written application? A. Yes, sir; he 
had delirium tremens. 

Q. Previous to the time of signing the application? A. Yes, sir; 
Laberto is his name; he had three policies, one of which was taken 
before the case of delirium tremens, which we paid without hesita¬ 
tion ; the otliei two he had in the meantime, and he had gone on a 
spree, and had died in consequence of the spree; that we don’t think 
a legitimate case to pay. 

Q. He stated in his application he never had an affliction of that 
kind ? A. Yes, sir, positively. 

Q. And that he was not addicted to intemperance ? A. Yes, and 
never had been. 

Q. Through whom did you take the policy ? A. I forget the name 
of the agent. 

Q. Was it the agent at Cincinnati? A. Yes, sir, the then agent at 
Cincinnati; we have had several there. 

Q. You issued the policy from the home office to him, and sent it 
through him to this person? A. Yes, sir. 

Q. And it was to be delivered by him to this person ? A. Yes, 
sir. 

Q. Who had charge of taking this policy—the application, I mean 
—and the issuing of the policy therefor? A. I don’t know whether 
the agent took it direct or through a sub-agent. 

Q. You have a medical examiner employed there ? A. Yes, sir, 
we always have; the family is quite well off, and they will take care 
of themselves. 


237 


Q. Do yon hold any company responsible for the acts and repre¬ 
sentations of the general and local agents in taking policies ? A. If 
they act within their instructions. 

Q. Do you hold yourselves responsible for collusion between the 
agents and the person taking the policy ? A. No, sir, because we 
should be making ourselves responsible for fraud; I will state a few of 
the cases contested there ; there is one, a $10,000 case, where we 
have got the man alive since; we are trying to punish the parties, 
and had a trial in St. Louis last week; there was a trial there, but 
the matter is not yet determined ; in the case of Dubois, in Canada, 
we sued the parties to compel them to deliver up the policy, and did 
not wait for them to commence a suit, and the court gave us judg¬ 
ment, and ordered them to pay the costs. 

,Q. Is that case yet pending in Cincinnati? A. Yes, sir. 

Q. Has it been tried ? A. It has. 

Q. What was the verdict ? A. The verdict was against the com¬ 
pany, and the court sent it back for a new trial. 

Q. Are there any other different defences from those ? A. Not in 
our company. 

Q. Does your company issue policies on what is called the Tontine 
plan ? A. Yes, sir. 

Q. Explain that plan if you will ? A. It is different from the 
ordinary life insurance simply in this, that the insured place them¬ 
selves in classes, and in those classes they do not get any surrender 
value by stipulation, nor do they get any dividends except at the 
end of the periods for which they go in. 

Q. Are they all life policies or term policies ? A. No term poli¬ 
cies can go in; they must all he life policies; they may be endow¬ 
ments ; the profits that would ordinarily be given to the policy¬ 
holders are reserved for those parties and are divided only among 
those who survive the periods. 

Q. How many policies had your company on the 31st of Decem¬ 
ber, 1876, of this class; of the Tontine number? A. I am sorry I 
can not give it to you. 

Q. Don’t you make a distinct item of them ? A. No ; we reserve 
* « * 

on them the same as on the others. 

Q. But, can’t you give the number of those policies; about how 
many ? A. Well, I would name, say 7,000 for the number. 

Q. How much would they amount to in insurance? A. Well, the 
average of our policies is a little over $3,000. 

Q. How many policies on the Tontine plan did your company 
issue during the last year? A. I think about 2,000. 

Q. You have issued 2,000 during last year? A. Yes, sir. 

Q. And you only issued how many in all ? A. About 6,000. 

Q. Then about one-third of them you got last year? A. Yes, 
sir. 

Q. Suppose a man takes a policy of $5,000 in the Tontine, and 
pays for five years, and then lets it Lapse, he is not entitled to a sur¬ 
render value ora paid-up policy? A. No, sir. 

Q. What becomes of the amount which he has paid in ? A. It is 
placed to the credit of those remaining in that class. 


238 


Q. How many classes are there ? A. There are three period and 
every year has a class; for instance in 1876, the parties who took 
policies that year are a class by themselves. 

Q. And all that go in that year? A. Yes, sir. 

Q. If they pay for five years and then either of them allow the 
policy to lapse, the reserve, I understand you, goes into a fund to 
the credit of the persons who were insured during the year he was ? 
A. Yes, sir. 

Q. How much are they loaded; to what extent ? A. They are 
issued at the same rates of premium as the others. 

Q. There is no difference except the forfeiture provision ? A. 
That is all. 

Q. Are there no dividends paid to the holders of the Tontine 
policies? A. The dividends that would naturally be paid to the 
party dying goes to the class to which he belongs. 

Q. Suppose a hundred of us were to get insured in 1876 for 
$5,000; suppose that, before any of them die, a-lialf of those policies 
lapse; suppose I am insured for $5,000, when I die do my executors, 
or whoever my policy is payable to, get any more than the $5,000 ? 
A. Ho, sir. 

Q. Then what becomes of the lapsed fund ? A. It belongs to 
those who live out the period. 

Q. What period ? A. Ten or fifteen or twenty years, which they 
select on entering. 

Q. Well, suppose I live out the ten years? A. Well, then you 
get all the reserve which belongs to the other fellows ; you get the 
$5,000 and all the reserve and all the dividends of the other people, 
supposing you to be the survivor. 

Q. Well, how many years do they run? A. The classes are ten, 
fifteen and twenty years. 

Q. Suppose at the expiration of the first ten years, a quarter of 
the policies issued are in force, that quarter takes the $5,000 insur¬ 
ance and the entire reserve that has lapsed? A. Yes, sir. 

Q. Is any portion of this reserve allowed to be broken into by way 
of expenses ? A. Hot in our company it is not ; not a dollar. 

Q. The forty per cent, or whatever is allowed at the commence¬ 
ment must bear the expenses? A. Yes, sir. 

Q. Supposing the forty per cent won't pay it? A. Then we will 
not do the business. 

Q. How do you know that it won't, when you only make the 
expenses in the aggregated A. Our expenses do not amount to ten 
per cent any year. 

Q. For what time? A. All the time. 

Q. The balance is divided in the premiums ? A. In return pre¬ 
miums and dividends. 

Q. Does your company or agents anywhere give suppers or din¬ 
ners ? A. Hot that I know of; not at our expense, they don’t. 

Q. In some companies it is claimed they do; w r e see in the papers 
flaming accounts of dinners of companies in Boston, Chicago and 
other places? A. Hot of ours. 


239 


Q. Is the expense of any entertainment of any kind paid, directly 
or indirectly ? A. No, sir. 

Q. Or funds that should go into the company ? A. No, sir. 

Q. Are the expenses of traveling of the officers of the company 
paid from the assets of the company ? A. No, sir; I have not been 
away from the office in ten years and don’t think the president has. 

Q. Has not the expenses of yonr traveling, any way, either directly 
or indirectly, been paid out of the assets of the company or property 
that belonged to the company ? A. Yes, if I go to Boston—I was in 
Boston two weeks ago about a reinsurance —my expenses were paid; 
my fare, etc. 

Q. Any thing more ? A. JVo , I come here to-day, the company 
must pay the expenses and no more. 

Q. Do they pay more than the ordinary expenses ? A. No, sir. 

Q. Do they ever pay your expenses except when you are away on 
business of the company ? A. No, sir. 

Q. And never has been paid ? A. No, sir. 

Q. And then only the ordinary usual traveling expenses are paid 
by the company ? A. You have got it. 

Q. Has there been^ any such thing as your company paying the 
expenses of its officers going to Europe ? A. Yes, I have been there. 

Q. When ? A. I was there about four years ago. 

Q. Where did you go ? A. I went to London ; I was at Baris. 

Q. Anywhere else' A. Well, I don’t know as I was anywhere 
else, except Europe, I think. 

Q. Did you go to Italy? A. Yes, sir; I went down to Vienna, 
where we have an office now. 

Q. How long were you gone on that European trip ? A. About 
three months ; no , I guess I was gone longer than that. 

Q. How much was paid by the company in the aggregate for the 
expenses of that trip? A. I think it was not to exceed $2,000. 

Q. Not to exceed $2,000 ? A. That is my best recollection. 

Q. Did they not exceed $3,000 ? A. No, sir, they did not. 

Q. Is that the only time you have been to Europe where your 
expenses have been paid by the company? A. Yes, sir. 

Q. Have any of the other officers been to Europe where the 
expenses have been paid by the company ? A. 1 think the president 
has been there once. 

Q. When did lie go ? A. About three years ago, I think. 

Q. And you went about four years ago ? A. Yes, sir. 

Q. About what was the expenses of his trip ? A. I don’t know ; 
I did not audit the account. 

Q. Were vouchers presented for the entire expenses of the trip of 
yours? A. No ; I think they took my word for it—for the amount. 

Q. It was audited in a round sum ? A. Yes, sir. 

Q. Has the president been away at any other time, at the expense 
of the company, to Europe ? A. No, sir. 

Q. Any agents? A. No, sir. 

Q. Have you been away, at the expense of the company, on any 
summer vacation except this one ? A. No, sir. 

Q. There is no case where the company has paid any of the expenses 


* 


240 


of your trip, except when you have been away on the actual business 
of the company ? A. No,'sir, that is as clear as I can express it. 

Q. To no place ? A. Nothing has been paid except the actual 

ordinary expenses ; no, sir. 

Q. In no case ? A. No, sir. 

By Mr. W eiant : 

Q. You visited Europe, yourself, alone, that time when you vent 
there on business ? A. I think I did, sir; I want to tell you now that 
the company never paid any of my family expenses, if that is w hat 
you want to get at. 

By Mr. Moak : 

Q. In cases wdiere surrender values were paid for policies surren¬ 
dered, have there been any cases in your company where receipts 
have been taken for more than the amount paid ? A. Not to my 
knowledge ; I think I w r ould know if it occurred. 

Q. You would know 7 if any thing of the kind occurred? A. Tes ? 
sir. 

Q. Where surrender values are paid for policies where the party 
applies at the Chicago office for the surrender value of the policy ; 
the application is sent to your home office by your agent there? A. 
Yse , sir ; we have to have a written application from the party. 

Q. That is sent to the home office ? A. Yes, sir. 

Q. Some one determines what the present value of the policy is ? 
A. Yes, sir. 

Q. Is it the actuary or some of his assistants ? A. Yes, sir. 

Q. When it is done, how do you send it—by check to the party 
who surrenders, subject to his order? A. We send it to the agent 
for delivery. 

Q. Does the agent of the company charge him any thing for it ? 
A. No, sir. 

Q. Do you charge him any thing ? A. No, sir. 

Q. In some cases it is said a charge is made for the surrender 
value—do you make any ? A. There is a charge made after the 
value is given. 

Q. I do not understand you ? A. The rule of the company is, that 
when a party w 7 ants the value of a policy, it is given to him the first 
time without charge. 

Q. If he don’t accept and sends in years after for the value, then 
you would charge him? A. We charge him for the value given if 
he merely wants to know 7 , but w r e don’t make a charge upon the 
surrender value given , upon which lie surrenders; he may to-day ask 
the value of the policy, and to-morrow 7 come in again ; if he does 
not surrender the policy w 7 e charge him five dollars, but allow it if 
he surrenders the policy. 

Q. The object being to prevent your being imposed upon ? A. 
Yes, sir. 

Q. But if, when *a valuation is made, he accepts it, you refund 
him that five dollars? A. Yes, sir. 


» 


241 


Q. Have you any fixed rule by which you are governed to the 
value you will pay under all circumstances? A. Yes, sir. 

Q. It is not a matter of compromise and dicker ? A. Not at all. 

Q. If a man comes in, you ascertain the length of time he has been 
insured, the premium paid, and then under the circumstances you pay 
the same amount of money to every person who applies ? A. We do. 

By Mr. W eiant : 

Q. What percentage of the reserve is it customary to allow ? A. 
It depends upon the nature of the policy and the length of time it 
has run. 

Q. Take an ordinary policy ? A. We give a half of the reserve 
and all the dividends. 

Q. In other words, if the reserve is $1,000, you give him $500, 
and if the dividends declared have been $100, you give him $100 in 
addition? A. Yes, sir. 

By the Chairman : 

Q. Do you stipulate to give him a cash surrender ? A. No, sir, 
except it is under $100 ; we stipulate to give a paid-up insurance. 

Q. No surrender value ? A. No, sir, we do not think it would 
be safe for the company to do it. 

By Mr. Moak : 

Q. Were there any arrangements made between you and a man 
by the name of De Witt, at any time, for reinsuring the United 
States Life Insurance Company ? A. It was never consummated, 
but it was talked about. 

Q. What was the arrangement talked of ? A. That we should 
reinsure the United States. 

Q. All their risks? A. Yes, sir. 

Q. What was the arrangement talked of as to the amount; in 
other words, about how much was the aggregate of the risks of the 
United States Life ? A. I don’t know; you might state that at 
about $20,000,000. 

Q. About what was the reserve of that company, can you tell 
that ? A. A bout $4,000,000, I guess. 

Q. And what arrangement did you make, so far as completed , 
about the compensation your company was to receive—what propor¬ 
tion of the reserve? A. We declined to reinsure them\ they 
wanted us to reinsure, but we finally concluded that we would not 
take the company, and declined entering into any arrangement of 
that kind ; it fell through; they wanted our company to assume that 
company’s risk, and we would not do it. 

Q. Who were your regular attorneys at that time? A. I had 
none. 

Q. I mean the regular attorneys of the company ? A. Fullerton, 
Knox & Crosby. 

Q. Do you have counsel? A. None, except the attorney who 
examines titles. 

16 



242 


Q. Who is he ? A. Henry A. Bogart. 

Q How much was paid to your company's attorney during 1870, 
in the aggregate ? A. I sent it up here. 

Q. Was any other sum, except that made in the statement, paid 
directly or indirectly to the counsel or attorney of the company 
during 1876? A. Ho, sir. 

Q. Either by way of bonus or any other way ? A. Ho, sir, not 
in any way, shape or manner. 

Q. Did the Union Mutual of Maine make arrangements with the 
United States Mutual afterward ? A. Yes, I think there was some 
arrangement, but I didn’t hear what it was. 

Q. Was a suit brought to restrain them from making an arrange¬ 
ment with the United States? A. I think there was. 

Q. Had you or your company any thing to do with the institution 
of that suit ? A. Hot in any way, shape or manner. 

Q. Who were the attorneys that brought that suit to restrain ? 
A. I don’t know; I know it was thought we had something to do 
with it, but we had not. 

Q. Did you have any knowledge, or did any one in the company 
have any knowledge, directly or indirectly, of the institution of that 
suit ? A. I did not, and I think no one else did. 

Q. Did you furnish any funds to carry it on with? A. Ho, sir. 

Q. Or any of the other officers of the company, to your knowl¬ 
edge? A. Ho, sir. 

Q. Was there any bonus to be paid to any officer by your com¬ 
pany if the reinsurance was effected ? A. Ho, sir. 

Q. Hone of any character ? A. Ho, sir. 

Q. Why was not this arrangement first started in regard to the 
United States and your company carried out; what was the reason ? 
A. You will have to ask Mr. De Witt about it, I don’t know; they 
wanted us to reinsure the company, and I wouldn’t take it that way, 
and the arrangement fell through; I would not take the company 
without the unanimous approval of the beard of directors. 

Q. The board of directors of your company ? A. Ho, of their 
company; it must have been done with the approval of their board 
of directors, ancl no underhanded work about it, or else I would have 
nothing to do with it, and I don’t think Mr. De Witt was able to 
control his board that way. 

Q. That is what you understood? A. Yes, sir, 1 understood so. 

Q. That he was not able to procure that arrangement ? A. Yes, 
sir. 

Q. What is the amount of the aggregate of the Tontine fund in 
your company ? A. It is over $100,000. 

Q. Give us the exact amount, if you will ? A. Five hundred and 
seventeen thousand five hundred and four dollars and eighty-four 
cents is what we estimate our contingent liability. 

Q. How much is the reserve on the Tontine policies ? A. That I 
could not tell you, because it is not calculated separately. 

Q. Can’t you give us some idea ? A. Ho, I could not. 

Q. How does it compare with the Tontine fund—larger or 
smaller? A. The reserve ought to be larger. 


243 


Q. How much larger; what per cent? A. Well, I should think 
it ought to be half as much again, perhaps twice as much. 

Q. What do you call the Tontine fund, that you call this $517,000 
odd; explain what you call it? A. This was reserved on lapsed 
policies and dividends of those who have died ; the reserves and divi¬ 
dends of the lapsed policies. 

Q. The Tontine funds are the reserves and dividends of the lapsed 
policies ? A. Yes, sir, and those who died. 

Q. And that is how much? A. Five hundred and seventeen 
thousand live hundred and four dollars and eighty-four cents. 

Q. That is half a million or more? A. Yes, sir. 

Q. And that, by an arrangement entered into, is to go to the par¬ 
ties from which the reserve originated ? A. Exactly so. 

Q. Do you know any thing of this Chamber of Life Insurance ? 
A. Well, I know very little about it; I know something about it; I 
know it exists. 

Q. Had you any thing to do with its formation ? A. Yes, sir; I 
was one that formed it. 

Q. When was it formed, or about when ? A. About three years 
ago. 


Q. How was it formed ? A. By a meeting of the leading gentle¬ 
men of the profession. 

Q. In the insurance business, you mean ? A. In the insurance 
business—life insurance business. 

Q. Throughout the United States? A. Well, an invitation was 
extended to all to meet and talk the matter over. 

Q. Who originated the plan —who is entitled to the credit of the 
institution? A. Well, that I could not say, for I really don’t 
know. 

Q. Did you originate it, or some one else ? A. I don’t think I 
did ; it has been talked of in the profession for ten years, or more. 

Q. Is your company a member of it ? A. Yes, sir. 

Q. Are its officers entitled to meet in its counsels and proceedings ? 
A. We are entitled to representation. 

Q. To one or more? A. To one. 

Q. Suppose the vice-president and president are present at its 
meetings, are they entitled to vote, or to only one vote ? A. To 
one vote; we are entitled to act as a unit. 

Q. Each company acts as a unit? A. Yes, sir. 

Q. Does your company contribute to the expense of the institu¬ 
tion? A. Yes, sir. 

Q. How much? A. I think $3,000 last year. 

Q. Out of what fund is the expense paid ? A. Out of the contri¬ 
butions. 

Q. Out of the surplus ? A. Oh, yes, sir; out of the general funds 
of the company, the same as any other expense. 

Q. About how much is the aggregate paid into the Chamber of 
Life Insurance in the year ? A. I don’t know. 

Q. Your company pays about $3,000? A. Yes, sir. 

Q. More or less than $3,000 ? A. I don’t think it is more. 


244 


Q. Who determines how much your company has to pay for the 
expenses ? A. The chamber. 

Q. The body itself? A. Yes, sir. 

Q. When does it determine that; at the commencement of each 
year or at the end of each year? A. Now, that I don’t know; we 
pay about once a year. 

Q. In other words, is your assessment of fees determined upon at 
the commencement of the year, as to how much you shall pay, and 
have it fixed at the time, or do you wait until the end of the year, 
and ascertain the aggregateof the expenses incurred, and then divide 
it up ? A. My impression is, that the estimate is made at the begin¬ 
ning of the year. 

Q. Supposing there is a deficiency ? A. It would be assessed. 

Q. And paid by the companies in the same proportion ? A. Yes, 
sir. 

Q. How do you determine the basis upon which the company 
pays; how do you determine whether your company should pay 
$1,000, two, three, four or five ? A. It depends upon the size of 
company. 

Q. Do you mean the number of the policies, or the aggregate 
assets of the company ? A. The company, taken altogether; taking 
the size of the company, the company which has the largest assets 
would have the largest number of policies, as a rule. 

Q,. Do you determine it by the assets or the policies ? By the 
assets and size of the company. 

Q. Who are the officers of the Chamber of Life Insurance ? A. 
I think Mr. Hewey, of Philadelphia, is president this year; I think 
Mr. McCurdy is the vice-president, and Charlton T. Lewis is the 
secretary. 

Q. Does it have any other officers? A. No, sir. 

. Q. Have you ever been its president ? A. No, sir; I have been 
vice-president. 

Q. As vice-president, do you know any thing of the workings of 
the institution? A. No, sir, I do not. 

Q. How frequently have you attended its deliberations within the 
past two years ? A. I do not think during the last year I have been 
there at all; previous to that, I think I may have been there three 
times. 

Q. Did Mr. Franklin attend last year? A. I guess he has been 
there once or twice. 

Q. You do not mean that it is no value to the companies, and that 
you pay $3,000 a year and let it run itself? A. We do not exactly 
do that; a great deal of the work done there is the getting up of 
mortality tables, and the experience of the companies forming the 
chamber; it don’t require any meetings, because the work is done 
in the companies. 

Q. Well, that don’t cost any thing, does it? A. Oh, yes; because 
you can’t get it done for nothing; it takes a great deal of time to 
do it. 

Q. In getting up the mortality of your company, does the Cham¬ 
ber of Life Insurance pay for it ? A. No; we get up tickets, and 


245 


they are passed over to a committee, it is not known where they 
come from, and they are put in indiscriminately, and the aggregate 
ascertained, without knowing where it comes from; you know a 
company does not care about having the details of its business 
known. 

Q. For instance, if your company put in your mortality another 
company would know your business, is that it ? A. Well, we do not 
propose they should know. 

Q. In other words, it is an institution for furnishing no definite 
information; you get up results merely? A. Yes, sir." 

Q. Is it any part of the object of that Chamber of Life Insurance 
to control legislation ? A. No, sir. 

Q. Don’t you understand it lias been done to a certain extent, and 
that agents have been sent to Massachusetts for the purpose, so far 
as possible, of effecting legislation there ? A. No, sir. 

Q. Or in Canada? A. Not improperly. 

Q. I assume that the gentlemen forming the Chamber of Life 
Insurance would do nothing improper, and I know no one in the 
Legislature would be bribed; but is it not one of the objects of the 
institution to prevent legislation that would affect adversely the 
interests of the life insurance companies? A. Well, the general 
object of this institution is the same as that of any other. 

Q. Its general object is to, as far as possible, accomplish all the 
good it can to the insurance interest ? A. Yes, sir. 

Q. And protect the insurance interests as far as possible? A. Yes, 
sir, including the policyholders. 

Q. Well, is any part of that duty, the watching of what is deemed 
obnoxious legislation and the preventing of it as far as possible, by 
fair and honorable means ? A. Yes, sir. 

Q. Do you know what the expense of that branch of the concern 
is per annum ? A. No; sir. 

Q. Or what it has been for any year ? A. No, sir. 

Q. Do you know whether an account is kept of what is done with 
the money ? A. I do not. 

Q. Who attends to that matter specially ? A. I should suppose 
the president of the institution would have the charge of that. 

Q. How frequently are the meetings of the institution held; they 
have stated meetings, I suppose ? A. Yes, sir ; it is either twice or 
four times a year, I don’t know which; I think, originally, it was 
four times a year, and now it is twice. 

Q. Are its meetings held in New York ? A. They have been 
heretofore. 

Q. Are its meetings public or private? A. Public, so far as the 
companies are concerned. 

Q. And private so far as the public is concerned? A. Yes, sir. 

Q. No one is allowed to be present at the meetings of the institu¬ 
tion except members or representatives of members ? A. Yes, sir, 
I believe that is the general rule. 

Q. Have you ever known any exception? A. No, I can’t say I 
have. 

Q. Flow many companies are members of it, according to your 


/ 



246 


best information? A. Well, I should think there must be perhaps 
twelve; all of the leading companies are members of it. 

By Mr. Weiant : 

Q. You mean from this State ? A. No ; twelve in all. 

Q. Twelve in all ? A. Yes, sir. 

Q. Are not all the companies members of it except the Washing¬ 
ton and Manhattan ? A, No, I think not. 

By Mr. Moak : 

Q. What company does Mr. Hewey represent ? A. The Penn 
Mutual, of Pennsylvania. 

Q. Who controls the expenditures of the institution ? A. I think 
it has a committee for that purpose. 

Q. What is the committee called ? A. That I don’t know. 

Q. Have you ever been a member of it ? A. No, sir. 

Q. Do you know any thing about what the funds of the institution 
are expended for—for what purpose ? A. I do not. 

Q. Have you any information ? A. No, sir. 

Q. Do you know what the salaries paid the officers of the institu¬ 
tion are ? A. I don’t think any of them get salaries, except the 
secretary. 

Q. Do you know what salary he getsl A I think he did get 

$ 6 , 000 . 

Q. A year ? A. Yes; what he gets now I don’t know. 

By Mr. Moody : 

Q. I would like to know what they do with the funds of the 
institution ; you say $6,000 a year is paid to the secretary ? A. Yes ; 
and very cheap at that. 

Q. I would like to know where their funds go; your company 
pays $3,000, and others a like sum ? A. They don’t pay any great 
sum . 

Q. Where does the rest of the money go to? A. I have not the 
slightest idea. 

Q. You have no idea where it goes to? A. No, sir. 

Q. What are the objects of it? A. To protect and foster the 
interests of life insurance; to interchange views in reference to it, 
and do the business at as low a rate as possible, and, generally to pro¬ 
tect the interests of sound life insurance. 

Q. And. this is done by an officer who receives $6,000 ? A. No ; it 
has a president and a vice-president. 

Q- He is the only one who receives a salary, isn’t he ? A. Yes; 
that is the only one who receives pay; all of the other officers are 
voluntary. 

Q. You have no idea of what becomes of the other money ? A„ 
Not the slightest. 

Q. Do you make any inquiry as to what is done with the funds 
your company pays ? A. No, sir. 


217 


Q 1 ou pay your money and make no inquiry with regard to what 
is done with it ( A. That is so ; yes, sir. 

Q. Does the association make any report, any account of the funds 
it receives ? A. Yes, sir. 

Q. And how disbursed ? A. Oh, yes, sir. 

s Q. Well, those are not published, are they ? A. It is published and 
circulated among the members of the association ; it is private to the 
members of the Chamber of Life Insurance; it is not a public doc¬ 
ument. 

By Mr. Moak : 

Q. To whom is the report made ? A. To the association; made at 
the general meeting. 

Q. By whom ? A. By whoever has charge of it; by the secreta¬ 
ry, I presume. 

Q. Have you ever seen such a report ? A. Ho, I have not. 

Q. Then how do you know it is made? A. It is not necessary to 
see the report to know it is made. 

Q. Then how do you arrive at it ? A. I have heard of it. 

Q. You have heard the report was made? A. Yes, sir; I know 
all the officers, but I don’t think I have been there in a year. 

Q. Have you ever heard what the report contained at any time ? 
A. Ho, sir; I don't know that I have. 

Q. Have you not heard what the money was used for ? 4. Ho, sir. 

Q. You have not the slightest information what becomes of the 
money paid ? A. Ho, sir. 

Q. And you say it is private ? A. Undoubtedly ; except to mem¬ 
bers of the association. 

By Mr. Moody : 

Q. Will you state what benefit your company has received in the 
past year for the money paid in ? A. It would be extremely diffi¬ 
cult for me to say. 

Q. In what way; where have you derived any benefit ? A. It 
would be exceedingly difficult for me to tell you that. 

Q. You don’t know of any benefits ? A. They have received a 
general benefit. 

Q. State in what way? A. For instance, there was a committee 
of the Indiana Legislature appointed to ascertain what should be 
done in reference to life insurance, and a large number of queries 
were made and sent out to get the information ; Mr. Lewis, in his 
capacity as secretary, got up all the information and answers to the 
questions ; it took him a very great while to do it, and a great deal 
of time was spent in getting the information; he had a great deal of 
information to send; then he had to write it out and have it printed, 
and some one has to take charge of that kind of business; it had to be 
sent to the Legislature of Indiana, and it requires a great deal of 
time and money to do it; some one would have to attend to it in 
the companies and we had not the time. 

Q. Such matters as that as pertains to the legislation in different 


248 


States, is turned over to this institution to look after, as I under¬ 
stand the duties of that institution? A. Yes, sir. 

By Mr. Weiant: 

Q. When has the Chamber of Life Insurance had its last meeting ? 
A. I do not know, sir. 

Q,. Have you no information ? A. I have not. 


By Mr. Moak : 

Q. Is there any commission paid on fire insurance procured as col¬ 
lateral to your company ? A. Ho, sir. 

Q. Is there not some agent whose business it is to see to that, who 
is paid a commission ? A. Ho. 

Q. Ho one at all in your company ? A. Ho, sir ; if there is a 
commission taken off it goes to the people who pay the policy. 

Q. Is it not the business of some one in your company to procure 
the fire insurance policy, where one is required? A. Ho, sir. 

Q. Who does it ? A. The persons themselves who get the loans. 

Q. Suppose a person w r ere to enter your office and desire a loan of 
$10,000 from your company, by whom is the search made of the title ? 
A. By Mr. Bogart. 

Q. And his compensation is not included in the amounts paid to 
attorneys and counsel in your report ? A. Ho, sir; his compensa¬ 
tion is paid by the borrower. 

Q. Have you any idea how much it amounts to in the course of 
the year; how is he paid, a per centage on the amount of the loan ? 
A. Yes, sir. 

Q. What per centage ? A. It is regulated by the company. 

Q. How much do you allow him ? A. We allow him to charge 
one per cent for the first $10,000, and one-quarter of one per cent 
on the excess. 

Q. For every loan of $10,000 how much does he get? A. One 
hundred dollars. 

A. And that is paid by whom ? A. By the borrower. 

Q. In other words, if a man borrows $10,000 your company pays 
him $10,000, and requires him to pay $100 out of it ? A. Yes, sir. 

Q. Suppose it is a peculiarly intricate title, is he allowed anything 
in addition ? A. Hot in our company ; he takes the good with the 
bad ; he is only allowed to make one regular charge, because he has 
some there very easy, and others that are heavy. 

Q. Suppose the search is made by the clerk at the expense of 
forty dollars or so, who pays it ? A. The borrower. 

Q. In other words, the borrower brings the muniments of the title 
with the search to the attorney? A. Yes. 

Q. And for his services in investigating the title, and for drawing 
the papers, he receives one per cent on every ten thousand, and a 
quarter per cent beyond that ? A. Yes, sir. 

Q. Well, suppose it is $20,000, he receives one per cent on $10,000 
and a quarter per cent up to twenty? A. Yes, sir. 


249 


Q. Does lie receive any more than that ? A. lie is not allowed to. 

Q. Well, does he ? A. I don’t think he does. 

Q. How much was the aggregate of the loans made during the 
year upon bond and mortgage? A. We loaned $1,987,000. 

Q. On bond and mortgage ? A. On bond and mortgage during 
the year. 

Q. Can you tell us how many loans there were to make up that 
amount ? A. No, I have not got that; I am very sorry I did not 
bring them with me. 

Q. Can you give us about the average amount loaned in each case ? 
A. I should think the loans would average $10,000. 

Q. You think they would average that? A. I think they would. 

Q. When a policy is obtained in any of these cases, is there any 
one in the company who either directly or indirectly receives any 
thing for obtaining the policy ? A. No, sir. 

Q. In some companies there is a claim that they do? A. Well, 
they don’t with us. 

Q. Do the attorneys retain all the commissions ? A. They do, so 
far as I know ; they do not divide with me. 

Q. No part goes to the company? A. No, sir. 

Q. Is there anything that requires a person taking a loan, to take 
an insurance on it ? A. No, sir. 

Q. Is there any such arrangement as this in existence in your com¬ 
pany, that a person who applies for a loan, before he gets it is re¬ 
quired to take a policy in the company ? A. No, it is not so in our 
company. 

Q. Can you state whether in any case, persons who have taken 
loans, have also taken policies, or can you state whether it is the case 
or not? A. I think it is likely there are some cases of the kind. 

Q. Do you know of any cases where it is made, of course not 
directly, but directly or indirectly, a sort of tacit understanding, as a 
condition to making the loan in the company that the borrower 
should take a policy ? A. No, we never make a condition. 

Q. Are there not cases in which it is a sort of tacit understanding ? 
A. I do not recollect of any ; we would always give a loan in pref¬ 
erence to policyholders, of course ; we would always prefer a policy¬ 
holder in advancing our money ; if you were a policyholder, and 
had need to make a loan on your premises, and came to the com¬ 
pany, we would prefer to give it to you, rather than to a man who 
was not a policyholder. 

Q. Well, you would give it to me in preference to an outsider ? 
A. Yes. 

By Mr. Moody: 

Q. If a man should come to you and propose to take out a $10,000 
policy, what then? A. We would not countenance it; we would 
stop him right there and say we do not do business that way. 

By Mr. Moak: 

Q. Do you not know of cases, in the past ten years, where per¬ 
sons have had a loan of $10,000 say, and have had a policy in the 
company ? A. No, sir ; not to my knowledge. 


250 


Q. Is it not done by your agents ? A. No, sir. 

Q. Has it not come to your information? A. No, sir. 

Q. Have you not been informed that your general or local agents 
have done that ? A. I think it is very likely they have. 

Q. Do you ever investigate those cases when you hear of them? 
A. No, I don’t think that it is usual; I don’t think they make a rule 
of doing it, or we should hear of it; if we knew of a case, and could 
trace it home, we would stop it at once. 

Q. Well, why don’t you know ? A. Because we make but very 
few loans, unless at the home office; our rules, as to loans out of 
town, are very stringent; here is what we require from a man making 
a loan ; we try to keep off our agents from making or getting loans, 
and here is the form we require to be filled up and sent by the par¬ 
ties ; it is expressed in every case ; here is one that requires where 
application is made for a loan, and here is another that we require 
him to sign when we pay him the money; what we desire to do is 
to cut off all of this kind of irregular business ; but whether we suc¬ 
ceed or not I can’t say ; but we do everything we can as a company. 

Q. Well, take this statement made on application in the first in¬ 
stance. A. I will read it: “I am the applicant for the loan refer¬ 
red to. The application accompanying this affidavit is the first com¬ 
munication I have made to said company for said loan. I have not 
proposed, made or entered into any arrangement or agreement actual 
or prospective, with said company, or any agent of said company, 
or any person claiming to act for said company, for the payment, 
directly or indirectly, of any bonus or any greater or other rate of 
interest than seven per cent per annum, payable semi-annually, for 
said loan. 

Subscribed and sworn to before me, ) 

this day of , 187 .” j 

That form is filled up when the application is made. 

Q. Well, that is not true, is it, because the borrower is required to 
pay your counsel one per cent? A. No, I think not; there is not 
any agreement about that; that is usual with all persons w T ho loan 
money; it is an understood thing in the community that if you 
borrow money you are to pay the expenses. 

Q. Then, if it is understood generally in the community, it is an 
agreement, is it not? A. Oh, yes, it may be taken that way, but it 
is understood, I think, beyond all question, that if a man loans you 
any money, you have to pay the expenses of the lawyer. 

Q. Well, what is the object of the? second affidavit; you also have 
an affidavit by the borrower to the following effect: “ I have receiv¬ 
ed this day of , 187 , from the New York Life Insur¬ 
ance Company dollars, loaned to me by said company in pur¬ 
suance of my application therefor, dated the day of , 

187 , on the property described as follows: I have 

not had, made, proposed or entered into any agreement or arrange¬ 
ment, actual or prospective, with said company, or any person claim¬ 
ing to act for said company, for the payment directly or indirectly 


251 


of any bonus, or of any greater or other rate of interest than seven 
per cent per annum, payable semi-annually for said loan. 

Subscribed and sworn to before me, \ 

this day of , 187 .” j 

Q. What is the object of requiring that affidavit by the applicant? A. 
The object is that possibly there might be some arrangement made 
between the making of the application and the paying of the money 
by some person to get a commission. 

Q. Is not the object of that—is it not made for the purpose of 
estopping the person who gets the loan setting up the defense of 
usury ? A. No, sir. 

Q. Well , that is apparent he would be estopped ? A. It was never 
made for that purpose. 

Mr. Moody —Well, you will have to get a better jury than law¬ 
yers not to see through that; it is apparent on its face what it was 
for. 

Q. Now, take the case of lapsed policies; are your dividends pay¬ 
able—for instance, you declare a dividend at the commencement of 
the year 1877, are they payable immediately, or when the next pre¬ 
mium is payable ? A. They are payable in reduction of the pre¬ 
mium, or on increase of insurance. 

Q. Suppose I am a policyholder, and you declare a dividend of 
fifty per cent; can I come in and get it out without waiting until my 
next premium becomes due? A. You will have to wait until it 
becomes due. 

Q. Well, suppose I am one of the few who don’t take a paid-up 
policy, or present surrender value? A. Yes, sir. 

Q. Does that dividend lapse ? A. Yes, sir. 

Q. And the reserve on the policy would lapse ? A. 1 es, sir. 

Q. Then where does the dividend and reserve go? A. It goes to 
the other policyholders ; it is for the profit oi the other annual pre¬ 
miums, and that makes up the surplus. 

Q. It goes into the surplus fund first? A. Yes, sir. 

Q. And is finally distributed in the usual way? A. T es, sir; to 
the other policyholders. 

Q. How much was the aggregate expense paid by your company 
for advertising last year ? A. Forty thousand five hundred and 
forty-three dollars and forty-one cents. 

Q. That does not include the expense of printing blank policies,, 
blank books, and such kind of things that you use at the home office, 
does it ? A. No, sir. 

Q. That is not included in there ? A. No, sir. 

Q. Does it include those little pamphlets you publish and distri¬ 
bute, or is it simply what you paid newspapers for advertising ? 1“ 

think it includes some of the pamphlets. 

Q. Then why should you not include all ? A. Because we have 
one that is an advertising medium ; it is an almanac. 

Q. Is that paid for in advertising? A. Yes, sir. 


V 


252 


Q. About how much is the cost of it ? A. The net cost to the 
company is only $4,000 or $5,000. 

Q. The net cost? A. Yes, sir; we get advertisements into it, 
but the net cost to the company is not to exceed $4,000 or $5,000. 

Q. Is this it [produced]? A. Yes, sir. 

Q. And this would be called an advertisement, and the expense of 
it you would charge to advertising? A. Yes, sir. 

Q. That was about $5,000, you say ? A. Y es, sir. 

Q. And the balance was paid to newspapers for advertising in 
those newspapers? A. Yes, sir. 

Q. Where, mostly; how much, for instance, was paid in the city 
of New York? A. Well, I can only give you an estimate. 

Q. Well? A. Perhaps one-third of it \ perhaps more. 

Q. Was any thing paid for advertising in the usual play-bill of the 
Academy of Music in New York? A. Yes, sir. 

Q. How much ? A. About a couple of hundred dollars, perhaps. 

Q. Was there not a good deal more paid for that ? A. No, I don’t 
think it was as much as that. 

Q. Was there not, during 1876, $3,000 paid for that ? A. No, 
sir. 

Q. Do you have a box at the Academy of Music ? A. I do not. 

Q. Do you attend there ? A. I do sometimes. 

Q. Weil, how many times? A. Three or four times perhaps 
during the past year. 

Q. Not more than that ? A. I think not. 

Q. Do members of your family attend there ? A. No, sir, except 
when I go. 

Q. Do they go when you do not go ? A. No, sir. 

Q. Is it not a fact that you have a box there without charge, in 
consequence of the advertising furnished to the company ? A. No, 
sir. 

Q. When you attend the institution do you pay the usual rates for 
attending ? A. How do you mean ? 

Q. I mean just what I asked; when you did attend the Academy 
of Music, did you pay for attending the usual price? A. Yes, sir. 

Q. On every occasion ? A. I do not recollect that I did on every 
occasion; I think I was invited there once or twice. 

Q. By whom ? A. I cannot recollect. 

Q. What persons connected with the management ? A. Well, I 
will say this, it was nothing connected with the advertising; it is no 
use of your cross-questioning me on that, because there is nothing, 
directly or indirectly, paid that way. 

Q. Do you mean to say that for the advertisements which were 
furnished on those play-bills at the Academy of Music you did not 
receive any favor, directly or indirectly ? A. No, sir; not in any 
way, shape or manner, and I think that will cover it. 

Q. You say you did not? A. No, sir. 

Q. You say not to exceed $200 or $300 was paid in that way ? 
A. My impression is it is about $250; in fact I don’t know that it 
was that. 


253 


\ 

Q. You say that it would not exceed $300? A. I don’t think it 
would. 

Q. Who has charge of your advertising? A. We do it princi¬ 
pally, or partly, through Mr. Deshorn, the advertising agent. 

Q. What is his first name ? A. That I don’t know. 

Q. Is he not connected with your office ? A. No, sir. 

Q. He is an outside man? A. Yes. 

Q. What compensation is he paid, or is he paid a commission on 
the advertising, or how? A. We pay him nothing. 

Q. How do you determine what advertising you want done; who 
determines that ? A. Well, 1 do some of it, and the cashier does 
some of it, and the president is consulted occasionally. 

Q. Is there any one paid a percentage or any thing else on the 
advertising, directly or indirectly? A. Not to my knowledge. 

Q. Have you any information ? A. No, I have no information. 

Q Suppose you determined you wanted an advertisement in the 
Albany Evening Journal, what is your method of advertising in 
that paper ? A. In the Albany Evening Journal, we would send it 
direct to the paper from the office. 

Q. \ ou would not go to Mr. Deshorn ? A. No, he attends more 
directly to the advertising in the city. 

Q. Suppose you determined to advertise in the Evening Express, 
you would send that to Mr. Deshorn ? A. Yes, sir. 

Q. And you would determine how long you wanted it inserted ? 
A. Yes, sir. 

Q. And he would have it inserted and send you the bill ? A. 
Yes, sir. 

Q. Would you have the price fixed at the outset or after the adver¬ 
tisement was inserted ? A. I think we would settle it at the time it 
came in ; the papers have regular rates. 

Q. You pay the schedule rates ? A. Yes, and we have it exam¬ 
ined and see it is according to the rates; sometimes there are special 
bargains made and we get it for less. 

Q. How is he paid for his services ? A. I believe the papers always 
allow advertising agents a commission. 

Q. Do you know how much? A. I do not, sir. 

Q. Is it frequently the case that your company sends out articles 
that are published as editorials, and pays for them? A. Well, such 
cases are very few. 

Q. Are there such cases ? A. I guess there are some in different 
parts of the country. 

Q. Have there been such cases within the last three or four 
months ? A. No, sir , I guess not. 

Q. Where articles have been written in your office as editorials, 
and sent out as advertisements and paid for? A. No, I guess not 
at all. 

Q. What is the character of the articles sent out that way ? A. 
Well, the fact is, I don’t think there are any articles written in the 
office. 

Q. Did your company have a large loan in the interior of the 


254 


State that was foreclosed this year ; something like $100,000 t A. 
No, sir. 

Q. What is the largest loan that your company has that has been 
foreclosed within the past two or three years ? A- I think the largest 
one is about $60,000 ; I think so. 

Q. Where was that? A. In New Jersey. 

Q. Has that been foreclosed ? A. Y es, sir. 

Q. How much did the property bring? A. We bought it in. 

Q. At the amount? A. Yes, sir. 

Q. When was the loan made; how long ago ? A. Perhaps three 
or four years. 

Q. When was it foreclosed? A. In 1876. 

Q. To whom was the loan made ? A. A man by the name of 
Madison. 

Q. Connected with the company ? A. No, sir. 

Q. Or to any one who had any thing to do with the company ? 
A. No, sir. 

Q. What property was it ? A. It consisted of dwelling-houses, a 
row of stores and a farm. 

Q. When did you foreclose it ? A. In 1876 ; I think we, got pos¬ 
session the early part of 1876. 

Q. Was it rented last year ? A. It was. 

Q. How much did it bring in? A. I think it aggregated about 
$5,000. 

Q. That is exclusive of expenses and taxes? A. Yes, sir. 

Q. How much were the expenses and taxes ? A. Perhaps $700 
or $800. 

Q. Not to exceed that? A. No, I think not. 

Q. What is the next largest loan your company has had in live 
years in this State ? A. It is rather hard to recollect that; the largest 
I can recollect is $30,000. 

Q. Where is that ? A. In Fifth Avenue. 

Q. That is in the city, I mean outside the city ? A. I cannot tell 
that without referring to the books; if there is any loan you want 
to get at particularly and will mention it I will answer you. 

Q. I don’t know where it was located, but I heard there was a 
large loan by your company in the interior of the State, and the prop¬ 
erty was sold for very much less than the amount of the loan ? A. 
I can say that is not so. 

Q. Hid your company loan any thing on what is called the Dwight 
House, at Binghamton, formerly owned by Daniel S. Dickinson ? 
A. No, sir, the application was made to us and we declined, 

Q. Your company has no loan on that property? A. No, sir. 

Q. Not to any amount? A. No, sir. 

Q. Was there a little unpleasantness down in New York between 
several of the insurance companies and a gentleman named Stephen 
English a few years ago ? A. Oh, yes, he has had some rows down 
there I believe. 

Q. Were you a party to any arrangement or compromise of any 
of these difficulties ? A. I think I was consulted. 

Q. Did you take any part in the arrangement of them ? A. No, 


255 


sir, not in the arrangement of them; I think there was something 
to he done, and I was one of the parties who were to judge of it; it 
has entirely passed from my knowledge. ' * 

Q. Was not some money paid to English by the Company? A. 
Not to my knowledge. 

Q. Did your company pay a cent? A. No, sir. 

Q. Or contribute to any sum ? A. No, sir; not a cent. 

Q. Directly or indirect!y ? A. No, sir ; not in any way, shape or 
manner. 

Q. Was not this Chamber of Life Insurance formed about the time 
the difficulty with English was on ? A. I think it was formed subse¬ 
quently to that time. 

Q. Subsequently to what? A. To the time the trouble with 
English was on. 

Q. Was it not formed during the time the trouble with English 
was in existence ? A. I think not. 

Q. You think that was settled up do you ? A. Yes, sir. 

Q. You say your company never paid or contributed any thing 
directly or indirectly, to any one? A. Yes, sir, I do. 

Q. Are the officers of your company required to give any security 
to the company? A. No, sir. 

Q. For the fidelity with which they discharge their duties ? A. 
No, sir. 

Q. No security furnished by any one of them? A. No, sir. 

Q. What were the receipts of the company during the last year ? 
A. Closely approximating $8,000,000. 

Q. How closely ? A. Seven million seven hundred and sixty-two 
thousand and ninety-eight dollars and sixty-six cents. 

Q. What was the aggregate of the expenses, excl usive of losses and 
dividends ? A. Seven hundred and forty-nine thousand six hundred 
and ninety-six dollars. 

Q. That covers all expenses, exclusive of losses and dividends ? 
A. That is the whole thing and includes taxes. 

1 *»y the Chairman : 

Q. Can you give us any calculation as to what per ceiatage it is on 
the receipts of "the company ? A. It is a little over nine per cent. 

Q. Is that about your average expenses ? A. About that. 

Q. Some companies are less, are they not ? A. The Mutual Life 
is less than ours I believe, but that is the only one. 

Q. Do you know about the Connecticut Mutual ( A. That is not 
less than ours. 

Q. They report a little less than seven per cent? A. But that is 
without the taxes. 

/ 1 If / , 

By Mr. Moak : 

Q. Llow much do you say the cost of the real estate of the home 
office was ; how much was the cost of the real estate, exclusive of the 
building ? A. I think it was about $550,000. 




256 


Q. That was the cost of the real estate, was it ? A. The land I 
suppose you mean ? 

Q. Yes, sir, and the balance was for the construction of the build¬ 
ing? A Yes, sir. 

Q. Where is it located ? A. The corner of Broadway, Leonard 
and Catharine lane; it is a square piece of land and lighted all round ; 
we could have sold it at a large per centage over what we paid for it, 

Q. What portion does your company occupy ? A. We occupy the 
entire first floor, with the exception of two first offices; one half of 
the second story, and we occupy about sixty feet down three stories 
in the rear ; it is about eight or nine stories in height. 

Qi How much is the aggregate rental of the building, exclusive 
of the portion you occupy ? A. Last year we received sixty-seven 
thousand one hundred and eighty-two dollars and forty-three cents. 

Q. For the rental of the portion of the building, exclusive of what 
you occupy ? A. Yes, and it is very much lower than wliat it was 
before; we have received higher than that. 

Q. Have you elevators in it ? A. Yes, sir, we have one in the first 
floor, and two or three in the basement; it is occupied by a large 
dry goods house, and it is fitted up with elevators for the dry-goods 
business 

By the Chairman : 

Q. Can you give the per centage which the rental pays upon the 
entire cost ? A. Yes; that w T ould be about four per cent. 

Q. From which the taxes and repairs are to be deducted ? A. Yes r 
sir; but the repairs are very little on the building; it is a fire proof 
building and the income from the offices pay that. 

Q. Would that reduce it to three per cent? A. Yes ; but it is 
hardly fair to figure it in that way. 

By Mr. Moak : 

Q. How much taxes do you pay the city a year; about what is the 
building assessed ? A. I think it is assessed at $1,000,000. 

Q. About what are the taxes in New York? A. It is something 
I have not attended to in New York. 

Q. I understand it is somewhere in the neighborhood of three per 
cent ? A. No, it is not three per cent. 

Q. 1 ou have to pay taxes for Croton water, I suppose ? A. Of 
course; it is hardly fair to take that as the estimate of what the 
building brings in because we could not hire premises such as we 
occupy, and furnished with the safe-rooms we have, short of $100,000 
a year. 

Q. But you could have got off with a less amount invested in the 
building for your own use? A. Very little less; we are growing 
every year, and going up stairs every year. 

Q. T ou have been growing, I suppose you mean ? A. I mean we 
are growing ; we did $3,000 ? 000 more business last year than we did 
before, and we did more business the year before than we did the 
year before that, so that we are continually growing. 


257 

Q. IIow many employes are there in all ? A. It is in the sworn 
statement. 

Q. Well, can’t you give us some idea without that ? A. Ho, sir ; 
that contains the exact number. 

Q. Where do they take their meals; do you have a hotel there ? 
A. Ho, sir ; we have a lunch-room for the heads of departments, but 
not for clerks. 

Q. What do you mean by the heads of departments? A- Well, 
for instance, the policy-room has a head to it; he checks all the poli¬ 
cies, and each department has a head to it, and that is what I mean 
by a head. 

Q. Well, how many heads of departments have you in all ? A I 
guess about ten- 

Q. Do they take their dinner in the building? A. Yes, sir; up 
stairs 

Q. Is it sent in from a restaurant? A. Yes, sir. 

Q. And that is paid for by the company ? A. Yes, sir. 

Q. The clerks get their own dinners? A. Yes, sir. 

Q They do not get theirs in the building? A. Ho, sir; they 
generally go out; I don’t pay much attention to it because it is not 
a matter of interest to us; we don’t pay for it, and therefore I don’t 
trouble my head about it. 

Q You have no restaurant connected with the establishment? 
A. Ho, sir. 

Q. Have you ever participated, directly or indirectly, in any com¬ 
mission the agents made through the granting of loans? A. Hot to 
the extent of a cent, in any year or any way. 

Q. Heither directly nor indirectly ? A. Heither directly nor indi¬ 
rectly, above nor below, or in any way you choose to put it. 

Q. Have you ever participated with any agents in the amount 
they received as commissions ? A. Ho, sir 

Q. Heither directly nor indirectly ? A. Heither directly nor indi¬ 
rectly, in any way, shape or manner; that covers that. 

Q. Has any officer of the company ? A. Hot to my knowledge, 
and I don’t think they have. 

Q. Have you had any writing whereby you were to receive a cer¬ 
tain sum after the commissions reached a certain sum ? A. Ho, sir. 

Q. Or has any person connected with the company, to your knowl¬ 
edge? A. Ho, sir. 

Q. Did you have some arrangement of that character with a firm 
of the name of Rhodes & Houston? A. Ho, sir. 

Q. Was there a firm of that name connected with your company ? 
A- Yes, sir. 

Q. Where? A. In Hew York city. 

Q. Did you not have a general arrangement with them whereby 
you were to receive any thing ? A. Ho, I did not. 

Q. Did anyone connected with the company, in your behalf ? A. 
Ho, sir; not to my knowledge. 

Q. What do you mean by saying you did not? A. I suppose 
such arrangements are made all the time, but I never had any thing 
to do with them . 

17 


258 


Q. What you mean is that you never had any thing to do with 
any such arrangement ? A. No, I never made any such arrange¬ 
ment. 

Q. Was any thing received by any member of your family ? A. 
No, sir. 

Q. Neither directly nor indirectly? A. No, sir; not in any way, 
shape or manner. 

Q. You never had an arrangement by which you received from 
them, either directly or indirectly, any thing yourself, or any mem¬ 
ber of your family received any thing? A. No, sir. 

Q Who is your present agent ? A. A man by the name of 
Levy. 

Q. What are the terms of his contract with the company ? A. 
lie is on salary. 

Q. How much ? A. I think he is guaranteed $10,000 a year. 

Q. Is that a salary and per centage on the amount of business he 
does? A. No, sir. 

Q. Why do you say he is guaranteed $10,000 a year? A. Well, 
I mean to say he has to get that. 

Q. Do you have some way of arriving, at the amount he is to 
receive; is it only a salary or a per centage? A. It is only a 
-salary. 

Q. And you give him $10,000 a year? A. Yes, sir. 

By Mr. Weiant: 

Q. Absolute and not contingent ? A. Well; it is contingent, in a 
certain sense. 

By Mr. Moak : 

Q. In what sense ? A. If we thought he was not earning his 
money we would not have him. 

Q You mean his employment is contingent, and not his salary ? 
A. Yes, sir. 

Q. May not that amount be increased or decreased dependent 
upon certain circumstances? A. No, sir; it can not be increased. 

Q. You pay him absolutely so much a year? A. Yes, sir. 

Q. Is there any arrangement by which you or any member of the 
company receives any thing from his receipts ? A."Not a penny. 

Q. And never has been ?' A. No, sir. 

Q. Is any thing he is to receive dependent on the amount of loans 
he may place ? A. Not at all; I don’t think he has placed a loan. 

Q. Does he assist the company or agents in placing loans ? A. 
No, sir; his business has nothing whatever to do with it. 

Q. Does the amount of his salary in any way, directly or indi¬ 
rectly, depend upon the amount of new business he brings to the 
company? A. No, sir. 

Q. Does he get a commission, or what becomes of the commission ? 
A. If he gets business himself he gets no pay for it; it is included 
in the salary. 

Q. Do you have other agents than him—local agents? A. Yes. 


259 


Q. Are applications made to him for policies directly ? A. Yes, 
sir. 

Q. Are applications made to him through local agents as well ? 
A. Yes, sir. 

Q. When made by the local agent, how does he act? A. He gets 
it as cheap as he can ; some he pays fifteen, some twenty, and some 
twenty-five per cent to; he gets it done as cheap as he possibly can. 

Q. Do you mean to say that you pay them, or does he pay them ? 
A. He sends in his account, in which that is included. 

Q. How much is the highest he has paid? A. I think he has 
paid a single brokerage as high as thirty-five per cent. 

Q. How much is the average ? A. 1 think the brokerage will 
average thirty per cent. 

Q. On the first premium? A. Yes, sir. 

Q< Hjw much on renewals ? A. There is nothing when there is 
a brokerage on renewals. 

Q. Well, how much is paid for collection ? A. We don’t pay any 
thing for collection in the city. 

Q. Do they come to the company’s office and pay generally ? A. 
Some of the agents come in and get receipts and we give them to 
them, but they get nothing for it. 

Q. Does lie have any thing to do with loans in the city ? A. Ho, 
sir. 

Q. Have you an agent by the name of W. B. Moore? A. Yes, 
sir. 

Q. What is he agent for? A. For the State outside of the city. 

Q. Where does he reside ? A. I don't know whether it is in Hew 
York or Brooklyn. 

Q. Has he any thing to do with loans made outside of the city ? 
A. Ho, sir. 

Q Ho where ? A. Ho; sir. 

Q. Is he in any way connected with loans made by the company ? 
A. Except in this way—we loan our money through local boards in 
the State, and they are sent generally through his agency. 

Q. Through whose agency ? A. Moore’s agency. 

Q Where is his principal office? A. In Hew York. 

Q You have an office here, have you not? A. Yes, sir 

Q- Well, suppose a man in Albany wants to get a loan, what 
course would you take ? A. In Albany, we would send him to Mr, 
Lacy. 

Q, He would take the application? A. Yes, sir. 

Q. And send it through Moore to you ? A. Ho, we have a local 
board here. 

Q. Who are they? A. I can’t tell, three or four of the leading 
gentlemen ; it would be sent to them, and they would pass upon it, 
and it would then go bach to Mr. Lacy and be forwarded to us; if 
it has the approval of the local board it goes to our finance com¬ 
mittee, and if they thought it was a good loan they would approve 
it, and it would be sent. 

Q Would Mr. Lacy receive anything for the loan, directly or in¬ 
directly? A. Hot that I know of, 


260 


Q. Don’t you know whether he would or not ? A. No, I do not. 

Q. You would not pay him anything? A. We would not pay 
him any thing. 

Q. And the borrower would not pay him any thing, so far as you 
know? A. No, sir. 

Q. Would Moore have any thing to do with it? A. No, sir. 

Q. Have you had information that the borrower has paid any 
thing to local agents? A. Yes, sir. 

Q , Have you investigated those cases? A. Yes, sir, 

Q- What became of them ? A. It was more rumor than any thing 
else. 

Q. You spoke of certain loans made through Moore ? A. Yes, 
sir. 


Q. What loans were those ? A. I will illustrate it in this way : 
for instance, take Rochester, there we have a local board of trustees, 
who are composed of fifteen or twenty parties, fifteen say, of the 
leading gentlemen of Rochester; they have in the local board what 
is called a finance committee ; if there are any applications for loans 
coming from Rochester, they apply to the local agent at Rochester, 
who is appointed as sub-agent to Moore, and controls the agency ; 
the same operation is gone through as I have described would be 

f one through with Mr. Lacy; and it comes through Mr. Moore, and 
e sends it to the company. 

Q. Does he receive any thing for his services ? A. Not to my 
knowledge. 

Q. Does he receive any commission on the loan ? A. Not to my 
knowledge. 

Q. To your information? A. Yes, sir, I have heard he received 
a commission, but I do not know where it was I heard it; I couldn’t 
give you the case. 

Q. What percentage? A. Well, that I couldn’t say. 


By Mr. W eiant : 

Q. You investigated it, you say ? A. No, sir. 


By Mr. Moak : 

Q. What proportion of the loans made in the State outside of the 
city of New York are made through Mr. Moore ? A. Well, I should 
think the majority of them we have got on our books to-day. 

Q. Outside of New h ork are made through him ? A. Yes, sir. 

Q. Has Mr. Moore ever paid to you or given to you directly or 
indirectly, or to any officer of the company, either directly or in¬ 
directly, any thing that was received on account of loans made by 
you or the company in this way ? A. Not one cent in any way, 
shape, form or principle. 

Q. You spoke of the organization you called the local board of 
Rochester? A. Yes, sir. 

Q. What are local boards ? A. Well, they are composed of gen¬ 
tlemen interested in the company, insured in the company, and they 


261 


are also policy holders as a rule, and they are supposed to give in¬ 
formation about the company to any one who wants to know about 
it, and what the standing is, and how it is conducted, and matters 
of that sort. 

Q. Do you have these local boards outside of the State? A. We 
have some in Ohio. 

Q. Whereabouts in Ohio? A. I couldn’t tell you sir, without I 
have the books here. 

Q. How many have you in this State ? A. Perhaps ten or tifteen, 
perhaps twenty. 

Q. In what places ? A. In all the large cities. 

Q. About how many do these local boards generally consist of ? 
A. Well, say from five to twenty. 

Q. What are they for 2 A. They are for reference to the com- 


pany. 

Q. Do they discharge legally any of the business of the company ? 
A. Ho, sir. 

Q. Except simply as an advisory committee ? A. Yes, sir; if we 
had an application for a loan, and wanted to know if it was a good 
one, we should probably address a confidential letter to some of the 
members. 

Q. Do they meet as a board ? A. They do when they are consti¬ 
tuted, but what they do after that I don’t know. 

Q. When constituted, wli '.t do you mean by that ? A. Well, when 
they are first formed they have a president and secretary. 

Q. Do they appraise property ? A. They have supervision of the 
appraisement. 

Q. Do these local boards receive any thing for their services ? A. 
Ho, sir; with the exception of a small reduction in the way of com¬ 
mission on any loan or on any policy they bring in. 

Q. Let us see if we can illustrate it: suppose I am a member of 
the local board of Albany, how could I get any commission from your 
company by any arrangement ? A. If you have a friend and bring 
him in you would be entitled, as a member of the local board, to a 
small commission. 

Q. What commission ? A. I think the maximum is live per cent 
on the premium. 

Q. What is the average ? A. I think it has never exceeded that. 

Q. Does the agent get any thing besides ? A. Oh, yes. 

Q. Then you have a local board here and the agent, Mr. Lacy; 
suppose I, as a member of the local board, take a friend to be insured 
for $25,000 for his life, how much would I get ? A. You would get 
five per cent. 

Q. How much would Mr. Lacy get ? A. He would get his usual 
commission—less the live per cent paid to you. 

Q. In other words the commission paid the local board would be 
deducted from the commission of the agent? A. Yes. 

Q. Suppose here in the city I should make an application for a 
loan, would I get any thing from that ? A. Hot that we know any 
thing about it, you would not. 


* 


I 


262 


Q. There would be no arrangement that I should receive any thing l 
A. No, sir. 

Q. Have you any means of preventing my exacting what I choose 
from the man who gets the loan ? A. No; I don’t see how we 
could. 


By Mr. Wei ant: 

Q. Have you any information that compensation has been exacted 
by members of the local boards ? A. No, sir. 

Q. Or by agents ? A. No, sir. 


By Mr. Moak : 

Q. Do you know of a loan being made to a man by the name of 
Sands, of Schenectady, by your company? A. No, sir. 

Q. Don’t you know there was a loan made to a man by the name 
of Sands, and quite a large bonus was paid for it? A. No, sir. 

Q. Have you ever heard that Sands gave a second mortgage to 
to this man Moore for $4,000 ? A. No ; that is the first I have heard 
of it. 


Q. You never have heard or received any information that for 
obtaining that loan, Moore exacted from his man a mortgage of 
$4,000 ? A. No, sir. 

Q. Or for any sum ? A. No, sir. 

Q. Or that he exacted any money or securities, or any thing of the 
kind ? A. JVq, sir ; he should never have had the loan if I had 
known it. 

Q. Have you ever heard, in addition to that, of his being requested 
to take an insurance in the company? A. No, sir. 

Q. Do you know whether you have a loan to a man by the name 
of Sands, in Schenectady? A. No, sir. 

Q. You have no means of determining here whether you have or 
not, I suppose ? A. No, sir. 

Q. And you have no means of determining here whether he has a 
policy in your company or not? A. No, sir. 

Q. The same man, I mean ? A. No, sir. 

Q. Do you know of this man Moore effecting any loans m Bing¬ 
hamton, for your company in the year past? A. I don’t think 
they have made any loans in Binghamton the past year. 

Q. Have you heard of his exacting from the applicants in Bing¬ 
hamton, as a condition of getting a loan in your company, a bonus l 
A. No, sir. 

Q. You have not heard of anything of that kind ? A. No, sir. 

Q. Do you know that a man by the name of Henry Mainwarren 
applied to your company for a loan through this man Moore? A. 
No, sir. 

Q Have you ever heard of his being required to take an insurance 
in your company, as a condition of obtaining the loan ? A. No, sir. 

Q. Or several insurances ? A. No, sir. 

Q. Or have you ever heard of his paying a bonus of live per cent % 

No, sir. 


263 


Q. Well, a man by the name of Bennett is said to have applied to 
yonr company for a loan and paid five per cent as a condition—have 
you ever heard of that ? A. No, sir; not to my knowledge. 

Q. Have you ever heard of that, I ask you?' A. Ho, sir. 

Q. Have you ever heard of Moore making it a condition with 
John Bennett that he should pay a per centage ? A. No, sir. 

Q. Ql- take an insurance of any kind ! A. No, sir. 

Q- Have you ever heard of his making it a condition of h\&pre¬ 
senting their applications for a loan, that they should pay him a 
bonus or take an insurance? A. No, sir. 

Q. Did you receive or see about the fifth of last December, a long 
communication from Moore, setting forth the whole plan of arrange¬ 
ment of the company, in regard to the system of local boards 
throughout the State ( A. Not to my recollection. 

Q. Well, in regard to the system of loaning money through local 
boards' A. No, I don’t recollect any such thing. 

Q. Or elfecti ng insurance through local boards? A. No; and I 
don’t know any reason why he should send out such a communica¬ 
tion. 

Q. I asked you if you ever received or saw any sack communication 
on any such subject? A. I have not the slightest recollection of 
having done so. 

Q. Or upon the manner of granting loans throughout the State 
through these local boards ? A. I have no recollection about it. 

Q. Now this agency of Rhodes A Houston I have spoken of 
before; did your company have a final settlement with them? A. 
Yes, sir. 

Q. About when ? A. I don’t recollect when it was. 

Q. Give us, as nearly as you can, the time? A. It must be four 
or five years ago. 

Q. Did they make in th it settlement a claim against your com¬ 
pany for alleged non-fulfillment of the contract in any respect? A. 

I don’t think thev did. 

*/ 

Q. In that settlement, didn’t your company allow them to retain 
some $20,000 which they claimed for an alleged non-fulfillment by 
your company of a contract with them ? A. No, sir. 

Q. Nor any sum? A. No, sir; I think their contracts were en¬ 
tirely settled up, and they paid us the balance they owed us. 

Q. They might have been settled up—that don’t answer my ques¬ 
tion ? A. No ; but they paid us what we are entitled to receive; 
there may have been a dispute about the office rent, and I think 
there was ; they wanted we should pay the office rent, and I thought 
we should not; we had a dispute about that, and I wouldn’t allow it. 
we should not; we had a dispute about that, and I wouldn’t allow it. 

Q. What was the office rent? A. Two thousand five hundred or 
$3,000 a year. 

Q. Did not your company allow them quite a large sum ? A. No, 
sir; we did not do anything of the kind. 

Q. Did your company allow them any sum on account of alleged 
non-fulfillment of contract ? A I don’t recollect that we did. 

Q. Take the number of insured in your company, about what is 


264 


the average number of deaths in a year? A. Well, we had 45,000 
members last year, and we lost out of that number 557 who died. 

Q. Is that about a fair average ? A. Yes, sir. 

Q. About what per centage would that be? A. About one and a 
quarter on a thousand. 

Q. Is not that a great deal less than usual ? A. It is less than the 
tables of mortality show. 

Q. What is the average of the tables of mortality ? A. It would 
be one-fifth larger. 

Q. IIow high do you know of any company sustaining any loss 
on the average to the thousand members in the reports ? A. Well, 

1 would not like to state that without the documents before me, because 
it. might be considered that I was speaking against other companies. 

Q. That varies with the age of the company, does it not ? A. 

Yes; the older the company is the greater will be the loss. 

Q. And it varies a great deal with the care with which the poli¬ 
cies are taken, does it not ? A. Yes, sir ;.that has a very great deal 
to do with it. 

Q. I understood you to say that most of the premiums received 
are paid at the home office ? A. Yes, sir. 

Q. Suppose a man applied directly to the home office, would you 
receive it? A. Yes. 

Q. Suppose I were to apply for a policy of $5,000 on my life and 
at the age of forty-five it is determined that my premium would be 
$200 for my life, would you give me any deduction on that premi¬ 
um in consequence of my going to the office and saving the com- , 
mission to the agent? A. No, sir. 

Q. You would make me pay the same as though it came through 
an agent? A. Yes. 

Q. Well, why, if a man is his own agent, should you not pay him 
the same per centage as you would the agent ? A. It would not be 
fair to the agent; it would not be fair to those men who give their 
entire time to the service of the company and for the benefit of the 
company; we don’t think it fair to those who give their talents to 
the company to treat them in that way, and allow a man to come to 
the office and apply for a policy on his life, and give him the same 
commission that we pay them. 

Q. But in the city of Hew York you have but one agent? A. 

Oh, we have a great many sub-agents there, sir; a very large 
number. 

Q. Well, if I live in the city of Hew York, and apply at your 
office, under no circumstances would you give me a deduction ? A. 

I would not say under no circumstances, because there might be 
circumstances that we would give you a small deduction; in the 
majority of cases we would not do it. 

Q. Then no one would receive anything? A. Ho, sir. 

Q. In no case ? A. Ho, sir. 

Q. Take the case of a borrower from your company; do you give 
them the list and let them insure their property where they please ? 

A. Ho, we rather press our tenants upon them ; if he says he don’t 
wish to go into that company, we let him go and do not bother with 


t 


265 


It, but we prefer to throw our business into the hands of our tenants 
if we can. 

Q. Suppose I apply to you for a loan of $10,000, you would say 
we shall prefer that you should insure in the Farragut? A. Yes, 
.■sir. 

Q. How many millions of insurance has the Farragut in the city 
-of Hew York? A. I have not the slighest idea. 

Q. Might not your throwing so many persons in the Farragut, 
produce serious results in this way; suppose there should be a con¬ 
flagration in New 1 ork like there was in Chicago, it would throw 
the Farragut sky-high, wouldn't it? A. Yes; it would throw all of 
them. 

Q. Well, not all, necessarily? A. Well, it threw all but two or 
three of the largest ones in Chicago. 

Q. Well, if all were thrown they would have a certain per centage 
on the insurance ? A. Yes, sir. 

Q. But might not the inconvenience be very serious ? A. Well, 
we would look at that before ; here is a row of eight buildings, for 
instance; we would not take the Farragut policy on that, but we 
would put some of it elsewhere. 

Q. Suppose I want a loan on the whole row of buildings? A. We 
would not let you put it all there. 

Q. How much would you allow? A. What would be considered 
fair by the underwriters. 

Q. Well, how many millions do you suppose your company has 
in the Farragut? A. I can’t tell you; I have not given any atten¬ 
tion to it; I know the tire insurance is distributed in ninety com¬ 
panies. 

Q. But you state one-fifth of it is in the Farragut? A. Yes, sir. 

Q. How much has your company in tire insurance? A. The 
aggregate amount of tire insurance by our company is $15,321,000. 

Q. What insurance company is the next highest, in your judgment, 
In your company—one-tifth in the Farragut would be $3,000,000, 
wouldn’t it? A. Yes, sir. 

Q. In real estate which you have incumbered ? A. Yes, sir. 


By the Chairman : 

Q. What do you think of this rate of commission you paid agents; 
is that essential to the interests of the companv to pay them as high 
as that, or do you think it may operate injuriously by inducing them 
to take bad lives—that is, take bad risks ? A. I don’t think it is 
possible to do the business any lower than we do it; I don’t think 
it is possible to be done; you will understand we do not pay same 
.commission on every kind of policy, and the aggregate of those com¬ 
missions do not amount to this large sum I have given you as 
figures ; I want to state that in the first place ; for instance, we only 
give on some policies ten per cent 

Q. What kind of policies are those ? A. Those are endowments; 
we only pay ten per cent, and won’t pay any more. 

Q. Will you explain the difference in the rates you pay the agents, 


266 


and in the commissions adopted on certain kinds of policies? A, 
We pay the same rates on ordinary life and endowments for twenty 
years to run; we don’t pay the same rates on ten years life policy; 
there is a still further different rate in the fifteen year endowment, 
and a still further one on the ten year endowment. 

Q. If a party pays a premium in a lump sum, on his whole life y 
you don’t pay the same premium as you do on a life policy ? A* 
’ No, sir. 

Q. But you take some such policies as that ? A. 1 es, sir. 

Q. What is the per centage on that ? A. He gets six per cent and 
that is all. 

Q. The endowments that have thirty years to run, and ordinary 
life policies you pay twenty-five or thirty per cent ? A. Yes, as the 
case may be; to some we don’t pay so much; I give you the maxi¬ 
mum ; we try to get the business done as low as possible, and do 
our business at as low a rate as we can. 

Q. Was not the business carried on fifteen years ago on a com¬ 
mission of fifteen per cent, and not to exceed two and one-half per 
cent on the renewals? A. No, sir, not to my recollection; fifteen 
per cent and seven and one-half per cent on renewals is the only one 
I have known. 

Q. For how many renewals? A. They were interminable. 

Q. For life? A. Yes, sir, for life; the commission now paid don't 
exceed that. 

Q. Don’t you think that the high rate of commissions may pos¬ 
sibly tempt agents to take bad risks and impaired lives? A. Yes; 
but it is the business of the management to prevent that; we do not 
trust to the agents particularly. 

Q. Could not the agent take a risk where a man was never exam¬ 
ined at all ? A. He could by collusion between him and the medi¬ 
cal examiner. 

Q. If he took a life where a man had an attack of paralysis a 
month or three months before, that could only be done by collusion ? 
A. Well, the man who was going to insure his life might conceal it, 
and then there would be no collusion. 

Q. The high commission might induce the man to run all those 
risks ? A. I don't think the commissions are high, and you don’t 
find many men getting rich at it. 


By Mr. Moak : 

Q. Well, I don't know, but your friend Lacy here is supposed to 
be pretty rich? A. Yes, sir ; but he got it in the fire insurance. 

Q. Well, the fire insurance men say he got it from life insurance, 
and now your life insurance men say he got it from fire insurance ? 
A. No, I don’t think his commissions from our company exceed 
$1,500 a year; I guess that is all he has. 

Q. But he has other companies? A. Not life companies; we do 
not allow it. 

Q, It is said that Peck & Hillman made their fortunes out of it ? 
A. Well, I don’t think so. 


267 


Q. If agents did succeed, at fifteen per cent years ago, in making 
fortunes and have got rich at it, is there anv reason why they should 
be paid more now ? A. Well, I don’t think the commissions we are 
paying are any larger now than the fifteen and seven and a-lialf per 
cent, take it altogether ; there are a great many things enter into it 
that don’t appear on the surface ; there is the character of the agents ; 
some men’s business would be worth considerably more than others, 
consequently some w^e pay more, to others less. 

Q. Do you make any difference in the commission you pay as 
regards character ? A. No ; but we make a great difference in hiring 
them ; that is a question for management. 

Q. Do you mean to say that you don’t hire any that are not 
reliable? A. Not if we know it, we don’t. 

By Mr. Moak : 

Q. You mean there are some men whom you would take at once 
as agents, and others you would be a little scary about? A. Yes, sir. 

Q. Or in other words if a man like Mr. Lacy, who is a man of 
the highest integrity, and whose word would not be doubted by any 
man in Albany, said a man was a good risk, that would end it, T 
suppose, and if he were to present a claim and say I know this man 
is a good risk, you would pay more attention to it ? A. Yes, sir. 

Q. I mention that because I think of all the insurance men spoken 
of in this city Mr. Lacy stands at the head of them—as a man of 
integrity and reliability? A. Yes, sir, he is a very fine man. 

By the Chairman : 

Q. You say the commissions are the same to all agents ? A. Oh, 
no, sir ; I have given you the maximum ; for instance, I closed a 
contract with a man to work for me on a brokerage at twenty-five 
per cent only yesterday. 

Q. What do you mean by that ? A. I mean that is all he gets ; 
we save four renewals by that. 

Q. If your agent had taken a risk where a man had had paraylsis 
within three months and he could have ascertained that fact by asking 
any one where he lived, he can hardly be considered a first-class 
agent, can he? A. Well, I don’t know about that; it can hardly 
be expected of an agent that he should go around and find if the 
statements of a man who applies to him are correct; he knows he 
is making a contract, that he has a cojry of it , and he has to stand 
by what he writes. 

Q. Well, would it not be better, by taking a little trouble, to avoid 
a risk which would involve litigation than to take one where you 
would take the risk ? A. No ; I don’t think there is very much 
danger of litigation where a company is conducted properly ; we 
have no trouble with our policyholders at all; the great majority of 
our policyholders are very well satisfied with us; they have no fault 
to find ; at the same time you can’t expect to satisfy every one. 

Q. Do you allow any one to modify or correct his statement when¬ 
ever he desires to? A. Yes; I wish I had a policy here ; I ought 
to explain that. 


268 


Q. Well, will you forward us one ? A. Yes, sir; we attach to the 
policy an abstract of the application as he made it; this we have 
placed there for the information of those we have insured, and for 
the correction of any unintentional errors; we address, a 
circular to him somewhat to this effect: “ Sir—Attached to the policy 
will be found an abstract of your application, and corrections can 
only be made with the approval and under the signatures of the 
officers of the company; if you desire to make^any corrections please 
return the same to me. Yours, etc. 11 

Q. What does that mean? A. The object of it is this : an agent, 
in the history of life insurance, will sometimes make a wrong state¬ 
ment to the party ; he will make it more favorable than it should be, 
and tell the insurer it is of no consequence; we want to be brought 
directly in contact with the insurer. 

Q. Let us illustrate it by a practical example: suppose I sent in 
an application to you and you should issue the policy, and I stated 
in the application my grandfather lived to be eighty, and my grand¬ 
mother to be seventy ; suppose I wanted to correct that by stating 
that my grandfather died at the age of sixty and my grandmother 
at the age of fifty, how will I correct it ? A. We have a blank and 
you must write on that blank, answer to question so and so, please 
correct it according to the inclosed, and notify me if the correction 
is satisfactory ; if it is satisfactory, we notify him the correction is 
made and is satisfactory to the company. 

Q. Well, suppose it was not all right to the company ? A. Well, 
then it is a matter of what we shall do about it. 

Q. Then, in fact, it is an inducement for him to place within your 
knowledge certain misstatements by which you can take advantage, 
if you see lit so to do. A. I don’t say that ? 

Q. Well, can’t you nullify the policy, and don’t it nullify it ? A. 
Yes, sir. 

Q. And you ask him to disclose facts which will nullify the 
policy? A. Yes; if a man knows a statement is wrong he has made 
in his application it is his business to correct it: we had a case of a 
ten thousand dollar policy that was taken on the life of a very prom¬ 
inent gentleman in Indiana; he did not state having had on his lip 
an attack of a cancerous nature, but when he got the policy he look¬ 
ed over the application and recollected that he had not stated that 
fact; he immediately sat down and wrote to the company a state¬ 
ment of that fact, and that was submitted to the medical board; 
they said “ if we had known of that, we would not have taken the 
riskof course the company was placed in rather an embarrassing 
position ; we wrote back to him and said that the medical board 
would decline the application, and we refunded the premium; we 
sent him a check, and that was the last of it. 

Q. In other words, you put him in the same position as if you 
had rejected the policy? A. Yes, sir. 

By Mr. W eiant : 

Q. But you were not obliged to do it, were you? A. Yes, sir, 
we were. 


269 


Q. Legally ? A. Ob, well, not legally, perhaps. 

Q. Well, how were you obliged to do it? A. The sense of the 
community would compel any decent man to do it. 

Q. Well, were you legally bound to do it ? A. Well, I shall have 
to refer you to our lawyer ; you are a legal gentleman yourself, and 
ought to know; I am not here to give any opinion. 

Q. What do you regard it as, a matter of courtesy, or that you 
were obliged legally to refund the money? A. I don’t think we 
would enter on that question at all: T think we would refund the 
money at once without entering into the question of whether we 
were legally bound to do so or not. 

Q. I ask you how you would regard your position legally; 
whether you were legally liable or not? A. Well, my personal 
opinion about the matter would be that perhaps, technically, the 
premium was forfeited ; I don’t know whether a court would take 
that view from the fact that the man did not intend to deceive. 

Q. How would your company regard it ? A. Well, as an officer 
of the company, 1 would pay back the money immediately. 

Q. How would your company regard it legally ? A. My opinion, 
technically, would be that the premium was forfeited. 

Q. That would be your opinion as an officer of the company, act¬ 
ing for the company ? A. Well, it is the same thing. 

Q. You are evading the question? A. No, I am not, but I 
don’t wish an answer to the question to go out which will give a 
wrong impression ; I have no objection to state the facts as they oc¬ 
curred, and I have stated to you what our company would do under 
like circumstances again, and you ought to be satisfied. 

Q. Suppose now, in case of that man, he had asked you to refund 
the money ? A. Well, he didn’t ask us to refund it. 

Q. Well, suppose he had, how would you have regarded yourself 
in law; as legally liable or not ? A. As a mutual company I don’t 
know how we should regard it ; it is a mutual company, and every 
man is a partner, and how it would alfect his rights I don’t know. 

Q. Well, that would have nothing to do with it; the question is 
a very plain one; as a matter of fair dealing you might refund it, 
as you did, and looking at it as a fair question of right and wrong, 
1 don’t know that you were not justified in doing it; but when it 
comes to a legal obligation, it is quite another thing, and I want you 
to say how you would regard it as an offic er of the company; as a 
legal obligation or not ? A. Well, if a man makes a misstatement 
in his application, technically, he forfeits the premiums he pays, un¬ 
doubtedly ; I think that is the law. 

Q. And you would regard your company as not liable to refund? 
A. I don’t think technically we would be liable to refund under such 
circumstances. 

By the Chairman : 

Q. Your practice, to give an abstract of the application with the 
policy, to some extent harmonizes with the recommendations of the 
bill this committee has reported ? A. I believe it does. 


m 


By Mr. WEi ant : 

Q. Wliat do you say as to loans outside the State being as good as 
those within the State, say within fifty miles of New Y ork ? A. My 
opinion is you can make loans in all the leading States in the Union; 
they are equally secure as those that can be made in the State or city 
of New York. 

Q. Would it not require more care or caution than it would within 
the State? A. No, I don’t think it would; the machinery would be 
more expensive, of course. 

Q. What do you think of a provision of that kind; that you 
should'not be permitted to invest in funds paying less than five per 
cent interest? A. I think that all of these kinds of restrictions are 
not good public policy, for this reason that I think the resjjonsibility 
ought to be placed on the trustees of the company of saying what 
should be done ; I think the best way i» to obtain such publicity of 
the statements of the company that all who run may read, and they 
can see what they are doing; in that way you might prevent any of 
the unpleasantnesses which have recently occurred. 

Q. Is it not a matter of fact that the lower the rate of interest the 
better the security ? A. No, I think the New York Central and 
Hudson River railroad bonds at seven per cent are good enough 
securities for any one; I don’t believe there can be any better 
security found ; they are selling higher in London than the gov¬ 
ernments. 

Q. But suppose the governments paid seven per cent, they would 
be higher than the railroad bonds, wouldn’t they ? A. I suppose they 
would, on account of their easy convertibility. 

By the Chairman : 

Q. Within fifty miles of New York, ought not the loan officers of 
the company to be able to have more personal knowledge of the 
value of a loan than they could of loans in the distant part of the 
State; I mean more personal knowledge from intercourse with the 
inhabitants, from the readiness in which they are able to visit the 
property on which the loans are to be made? A. I think, from 
the way loans are generally made, the appraisal as a rule is done by 
experts; it is not done by the officers of the company ; I don’t have 
any thing to do with what the loans are whatever ; the application 
always comes to me. and I have it registered in a book which I keep 
for the purpose, and I pass it immediately over to the finance com¬ 
mittee. 

By Mr. Moak : 

Q. If you were asked what the value of the real estate was that you 
own in New York, or on which you have loaned money, I suppose 
there would not be one case in a thousand where you could give an 
opinion ? A. I don’t think I would be competent to do it. 

By the Chairman : 

Q. If the finance committee had reason to know that in any part 


of the State the appraisers had tilled in a loan at twenty per cent 
higher than they thought the property was worth, would they still 
make the loan ? A. No ; they would cut it down ; if a loan comes 
from the center of the State, we look at the surroundings of the 
person who wishes to borrow, and then say we will not give the 
man as much as that; we cut it down to just how much we will 
give. 

Q. In the city of New York, do you never appoint a committee, 
or have a committee appointed to examine the property with a view 
to examine the appraisements, to see whether it is fairly appraised 
by the appraisers ? A. The loans in the city are all supervised by 
some member of the committee ; there is no loan made without per¬ 
sonal inspection. 

Q. By a committee of the board ? A. Yes, sir. 

Q. And such a board could have more personal knowledge also of 
loans within a short distance of New York, say New Jersey, than 
they could of loans 100 or 300 miles away from the State ? A. It is 
a question whether we could get all the loans we would want if we 
didn't do so ; we can’t get all the loans we want now; that is, good 
bonds and mortgages ; there is no application for the money ; or in 
other words, there is not sufficient property in which loans are 
required. 

Q. 1 am suggesting that it is desirable to loan within fifty miles of 
New York, for the reason that a committee of officers could go and 
examine the property, and some of them might have personal know¬ 
ledge of the value of the security, the property offered, far more so 
than if the property was in this State some 300 miles away ? A. I 
think you are correct about that; as to the advisability to taking a 
loan so far off it might be a fair question ; we find it very difficult 
indeed to get our money out even with our present regulations. 

Q. Then the extent of your loans would make it desirable for you 
to have an extended district instead of contracting it ? A. So far as 
getting rid of the money is concerned, that would be better; we 
would have a better show if that were done ; I am in favor of leaving- 
insurance companies to make their own investments ; but I am not 
in favor of allowing them to make investments at random by any 
means. 

Q. Don’t you think the difficulty you have met with has been in 
consequence of the complaint that there have been large charges 
made by some parties who have had charge of and taking the appli¬ 
cations for and, making the loans ? A. Oh, I think it is very likely. 

Q. And it would be for the interest of the company to correct that 
evil, would it not ? A. Yes, sir, I know very well that we should 
not make a loan if we knew or had reason to suppose there was a 
bonus going to be paid upon it to the agent; we should throw it out 
directly ; if I knew they ’were extorting a bonus from a man, I 
should certainly throw that loan out. 

By Mr. Weiant : 

Q. I desire to ask you a few questions in connection with the 


272 


report; this statement is made on knowledge, information and belief r 
by you, is it not ? A. Yes, sir. 

Q. Tt is the report to the Insurance Department ? A. Yes, sir. 

Q. There is some part of it that you have no knowledge of, have 
you, I mean, as to its actual correctness; now, for instance, you take 
the amount of risks on the policies of the company, that you have 
to take from the report of the mathematical department ? A. Yes,, 
sir; that I don’t know by personal investigation. 

Q. Schedule A shows the different accounts of stock and the- 
amount you have invested in each, respectively? A. Yes, sir. 

Q. Do you know that those bonds and stock were in possession of 
the company at the time you made the verification of the report £ 
A. Yes, I know that fact. 

Q. How do you know it ? A. By examination, and by their being 
my custody. 

Q. What examination did you make ? A. They were all submit¬ 
ted to the finance committee at the end of the year, and by them* 
counted and examined. 

Q. Each security ? A. Each particular security. 

Q. You say it was submitted to the finance committee ? A. Yes r 
submitted to the finance committee, and each was counted and certi¬ 
fied to be correct. 

Q. And you were a member of the finance committee ? A. Ho r 
I was not; but, as an officer of the company, it was my duty to sub¬ 
mit them to the committee. 

Q. Did those securities ail pass through your hands at that time £ 
A. They did. 

Q. And you examined t hem personally ? A. Yes, sir. 

Q. And you know they were in possession of the company? A- 
T es, sir; and they are in the possession of the company to-day r 
unless they are exchanged for some other kind; that is absolute^ 
knowledge. 


By Mr. Moak : 

Q. Why does your company hold so large a balance in the bank ' 
for instance, a million and three-quarters? A. We do not, as a rule; 
at the end of‘the year there is a large amount comes in; a half a 
million, almost instantly, from bonds and mortgages; and the inter¬ 
ests on all our investments com e in, and that makes a large accumu¬ 
lation twice a year. 

Q- How soon is that drawn down ? A. Just vas soon as we can 
get it out. 

Q. Suppose you had that on the first of January, would you if 
you could not get bonds and mortgages, go to work and invest in 
stock { A. 1 es, sir, instantly ; I can illustrate it ; I will say I don’t 
think we have $400,000 in the bank to-day. 

Q. Has any member or any officer of your company received,- 
either directly or indirectly, any thing from any bank or trust com- 


pany or corporation of any kind, or officer of such lank or trust 
company , any thing, or been promised any tiling, for the deposit of 
any money in that bank or trust company? A. Not to my know¬ 
ledge, I have not. 

Q. You have no information of any one else? A. No; no infor¬ 
mation of any one else, and I don’t believe it either. 

Q. It is charged, for instance, if the officers of a trust company 
want to make an investment in stocks in the market they would come 
to you and say : you deposit with our company such stocks and I will 
divide the venture with you ; have you any knowledge of any tran¬ 
saction as that ? A. No ; I have no knowledge of any such thing. 

Q. And you never have divided with any one in such a way ? A. 
Never, in any way, shape or manner. 


By the Chairman : 

Q. What proportion of the bonds and mortgages are due ? A. 
They are all due, except those taken during the past year. 

Q. What amount has been paid in during the last year ? A. I 
brought that up with me, and have a statement of the character of 
the loans ; we have a great many applications; we had paid in during 
1876 , $ 2 , 300 , 000 . 

Q. Paid in to the company ? A. Yes, sir. 

Q. How much have you re-loaned? A. One million nine hun¬ 
dred and eighty-seven thousand dollars. 

Q. Not quite as much as you received ? A. No, sir; our govern¬ 
ment bonds are heavier, you will observe. 

Q. The mortgages are payable in one year, are they not? A. One 
year; yes, sir. 

Q. On farm lands, do you take the buildings into consideration— 
I mean do you take an insurance on them as collateral ? A. Wherever 
the buildings amount to any thing, we always take an insurance on 
them, but where they do not wish to give it we waive it. 

Q. Do you consider farm lands or city property the better secu¬ 
rity? A. If loaned in proper proportion, they are about equal; if 
you loan on a farm, say for instance, twenty-five per cent of its value, 
exclusive of buildings, it is a very safe loan. 

Q. Why is it not more safe than if you loaned fifty per cent on a 
citv building, where the building constitutes nine-tenths of its value? 
A. There is this difference, city property could be managed by the 
company in rentals, but farm lands could not. 

Q. That may be so, but a farm would be much more readily turned 
into money, would it not ? A. Well, at twenty-five cents on the 
dollar, perhaps it might. 

Q. Has there not been much more shrinkage in value in city 
property than in farm lands ? A. Well, if you ask a city man lie 
says no, and if you ask a country man he says yes; my opinion is 
there has been a shrinkage all over the country. 

Q. Have you had any considerable amount of loss in stocks of 
companies incorporated by the laws of this State as distinguished 
from mortgages, and loans on bonds and mortgages? A. No, sir. 

18 


274 


Q. You have only the Delaware and Hudson Canal Company 
stock ? A. Yes, sir. 

Q. There has been a good deal of shrinkage in the Delaware and 
Hudson Canal Company’s stock lately, hasn’t there? A. Yes, sir. 

Q. That wide range of selection, all incorporated companies which 
is stated in the law, does give a chance to have some very bad in¬ 
vestments, does it not\ A. Well, I think it does; that is so. 

Q. It would include all oil stocks for instance, would it not; it 
would permit them to loan on such companies? A. I believe it is 
the opinion of some lawyers it would. 

Q. Are you permitted to loan on the bonds or stocks of companies 
chartered by the laws of this State ? A. Yes, sir. 

Q. Has your company ever been examined by the Insurance De¬ 
partment? A. Ho, sir. 

Q. Since its existence? A. Ho, sir; I don’t think it has. 

Q. Don’t you think it would be more for the advantage of the 
company if an examination was made, and the statements of such 
examination published? A. Ho, I think the public has more confi¬ 
dence in the management of the company itself, than they would 
have in any statements, no matter who published them; our busi¬ 
ness has not fallen off, on the contrary it has been increasing. 

Q. Has your business , for the last three months, been just as 
much as the balance of the year, in proportion ? A. It has been 
better; considerably so. 

Q. Well, that is contrary to the statements of other companies, 
isn't it? A. Our business this year is better than the year before, 
and our company’s returns show we have more new risks during the 
past year than any other insurance company. 

Q. Some of the gentlemen connected with the companies that have 
become insolvent have, until recently, stood high and well in Hew 
York, have they not ? A. How I wish you would excuse me answer¬ 
ing that question. 

Q. Well, would you not, three months ago, have said that? A. 
Well, they are all honorable men. 

Q. Well, if all honorable men are reliable in the company, do 
you think they are better fitted to give the public a statement of the 
affairs of their company, than a statement made after examination by 
the department? A. Oh, I don’t object to any examination being 
made by the department, but I simply give you rny opinion. 

Q. But as a means of giving the public confidence, what do you 
think of it? A. Well, I would not like to say about other com¬ 
panies ; I would not take much stock about the examination of our 
own company; but we could do with an examination or without it. 

Q. Don’t you think that if the examination was made, and the 
fact should go out broad-cast that your company was in good stand¬ 
ing, that statement being certified to by the department, it would do 
you good? A. Ho, sir; I don’t think it would do us a particle of 
good, but understand, I don’t object to it—we can do either, with 
or without it. 


275 


By Mr. Weiant: 

Q. Wliat knowledge had you that, at the time of making the 
report, the bonds and mortgages here stated were on hand ? A. 
Well, they were all examined. 

Q. That you know ? A. That I know. 

Q. 1 on took part in the examination personally ? A. I did, and 
every one was checked off. 

Q. As to the cash in hank and in course of transmission, what 
knowledge had you that the company had that $1,429,921 on hand ? 
A. Well, the bank-books were all balanced. 

Q. Those you saw ? A. Those I saw, and they were submitted 
to the finance committee, and examined by them. 

Q. Well, they showed the amount in the bank? A. Yes, sir, and 
the amount of money in the drawer was counted by the chairman 
of the finance committee on the evening of the thirty-first day of 
December, after business hours, and he gave a certificate to the com¬ 
mittee that he had examined it, and the amount therein. 

Q. Did you take any part in that ? A. No, sir. 

Q. Now, won’t you give the details of the agreement between 
yourselves and the officers of the United States Life? A. There 
never was any agreement. 

Q. Well, the negotiation? A. Well, that was the proposition as 
I stated it. 

Q. Well, who made the proposition in the first instance? A. The 
president of the LTnited States. 

Q. What was his proposition ? A. He wanted us to reinsure the 
United States. 

Q. Did he state on what terms? A. Well, I guess he did; he 
stated a variety of ways. 

Q. Can you give any of the terms that he specified ? A. I think 
we were simply to take the assets of the company, and reinsure the 
company. 

Q. Were there any details? A. Nothing, except the securities 
would have to be examined to see if everything was correct. 

Q. Did he reserve any benefit to himself? A. Well, he would 
receive a benefit from the sale of the stock he had; he was a large 
stockholder. 

Q. In what way was he to receive a benefit? A. Well, he was a 
large stockholder, and would get a good price for his stock. 

Q. Was there any further compensation, or any thing in the way 
of benefit that he would derive from it ? A. Well, it is a private 
matter. 

Q. Do you decline to answer on that ground? A. I don’t know; 
that was confidential at the time; I don’t know whether I have a 
right to say. 

By the Chairman : 

Q. These things have become public, and it is as well to state 
whatever there is, rather than have them hanging in the air ? A. 
Well, I am perfectly willing to say that I had no interest in it. 


By Mr. W eiant : 

Q. Well, as to the president of the United States? A. Yes, he 
was to receive something. 

Q. Well, what w T as it; give us the statement? A. Well, I would 
rather give you that personally, upon my word I don’t like to state 
it; it was confidential to me. 

Q. I want to see what sort of arrangements you make when you 
reinsure a company; they are acting, to a certain extent, in a trust 
capacity ? A. Well, that is a stock company, in part. 

Q. That may be, but I regard them all as acting in a trust capaci- 
ty? A. Well, I think they are, as officers, so far as the trust funds 
are concerned. 

Q. They were acting for some one else besides themselves at this 
time : I don’t think it will be any breach of confidence ? A. I do- 
wish you would excuse me; of course there was a proposition made. 

^ Q. Well, give it to us; it may be necessary for us to legislate upon 
a subject of this kind in order to prevent a repetition if it is improp¬ 
er ; I think we are entitled to a detailed statement of the negotia¬ 
tions? A. Well, I have no objections to give you this personally, 
but the question as to the negotiation was confidential, and I don’t 
like to go out into the world as breaking a confidential communica- # 
tion. 


By the Chairman : 

Q. You do it under the compulsion of a subpoena of the com¬ 
mittee; a man very often has to do things in court which he would 
not voluntarily do? A. Well, if you gentlemen think it is not 
breaking an honorable pledge, I have no objection to giving the in¬ 
formation. 

By Mr. Weiant : 

Q. It is understood that you don’t do it voluntarily ; it is compul¬ 
sory on your part, and so it is on ours to go into the examination ; 
we have to ascertain all the facts we can bearing on these different 
subjects of life insurance; I think it is decidedly necessary that we 
should have the information, because we have bills introduced, and 
it is one of the sections of the bill now before the House which 
governs that ? A. Well, this was really more of a private arrange¬ 
ment. 

Q. He spoke to you as an officer of the company, did he not? A, 
I think not. 

Q. He did not expect you to do the business of reinsuring that 
company yourself, but he spoke to you in an official capacity ? A. 
But on behalf of the company I declined it, and that is an end of 
the matter. 

By the Chairman: 

Q. You are asked if the proposition was made, and you can state 
it, and state you declined it ? A. Well, how am I going to get along 


277 

with the other matter as an honorable man and give a confidential 
-communication ? 

By Mr. Weiant: 

•j 

Q. He came to you as an officer of the company, and knew that 
you individually could not do the reinsurance spoken of, but that 
you were acting on behalf of the company ; I think we are entitled 
to the information on this subject, whatever you can give us, although 
it is a matter that Mr. DeAYitt would not want the public to know ; 
he was acting to a certain extent in a public capacity? A. Well, I 
wish you would give me a little time to consider it. 

Q. This is the last subject of inquiry; I have no further questions 
to ask you ? A. AW ell, if I have to answer it, of course I have no 
■objection personally; on that ground, if the committee insist on it, 
you have got a right to it, I suppose. 


The Chairman —Mr. Weiant thinks it will be of service. 

By Mr. Weiant: 

Q. It is on the subject of reinsurance, although the contract was 
not perfected ; I don’t see how we are not entitled to the manner in 
which it was brought about, or attempted to be brought about; it 
was only by the honor of Mr. Beers, in refusing to take part in it in 
regard to their company, ^negotiation terminated; the negotiation 
was broken off by his company, and not by the other company; it 
is information the committee is entitled to; no doubt about it; per¬ 
sonally I don't know any thing about it, and don’t care any thing 
about it, but as a member of the committee, I know the House 
expects us to get all the information we can? A. AYell, the propo¬ 
sition as made to me was this, that Mr. DeAYitt was to have an 
annuity of $10,000 a year. 

Q. In other words he was to be paid $10,000 a year ? A. Yes, sir, 
as an annuity. 

Q. For life? A. My impression is it was for his life, but it may 
have been for a limited number of years ; it has almost passed from 
my mind now. 

By the Chairman : 

Q. You have Tontine policies, you say t A. Yes, sir. 

Q. Do you regard them as a liability? A. Contingent, not abso¬ 
lute. 

Q. How can they be contingent when they inure entirely to the 
benefit of the survivors of the insurance? A. AYell, the amount may 
be contingent, because at the end of the time there are questions 
that enter into the distribution; you may have $500,000 in some¬ 
thing, and at the end of the year we lose a portion oi it; that would 
alter the $500,000, but not the principal. 

Q. The amount would go to the survivors of that system of insur¬ 
ance ? A. Yes, sir. 

Q. But the amount would be contingent? A. Yes, sir. 


278 


Q. Therefore, is it right to charge it as contingent liability ? A. 
Our company considers it so, and it is so stated in our reports. 

Q. For its full amount ? A. Yes, sir. 

Q. Should it not be qualified in some way ? A. We give you the 
whole of it, and it can’t be worse than that. 

By Mr. W eiant : 

Q. What was Mr. DeWitt to have for his stock ? A. I think the 
'proposition was $250 or $300. 

Q. Do you know how much he held ? A. I do not. 

Q. Was he to have any other benefit ? A. Not that I know of. 

Adjourned until Wednesday morning. 


Wednesday, March 28, 1877. 

Present, the full committee; Mr. Cowdin in the chair. 

Bichard A. McCurdy, sworn : 

Examined by Mr. Moak : 

Q. You are vice-president of what company? A. Of the Mutual 
Life Insurance Company of New York. 

Q. How long have you been ? A. About ten or eleven years. 

Q. Previous to becoming vice-president, were you any way con¬ 
nected with it? A. I was one of the company’s attorneys, yes, sir. 

Q. In any other cajDacity ? A. No, sir. 

Q. Was there a man by the name of F. Winston, Jr., at any time 
cashier of the company? A. No ; there was F. H. Winston. 

Q. Son of the then president ? A. Yes, sir. 

Q. At the time of his death, or previous to his death, had he quite 
a number of policies in the company which had lapsed ? A. He had 
some policies. 

Q. Amounting to some $15,000 or over? A. No, sir; I think the 
amount was about $12,000. 

Q. Had those policies lapsed ? Q. Yes, sir, they had. 

Q. All of them ? A. I think so ; it is a matter of some years ago; 
ten years ago. 

Q. And subsequently to his death were those policies restored? A. 
Yes, sir. 



Q. And the entire amount of them paid to his widow? A. Not to 
his widow. 

Q. Well, to his representatives? A. They were paid. 

Q. By what authority was that done ? A. It was done by the 
authority of the full board of trustees after a thorough examination. 

Q. The board of trustees or finance committee? A. No, sir; the 
matter was presented to the committee on insurance, by them exam¬ 
ined, and a written report made to the board of trustees; the board 
of trustees unanimously ordered the restoration of the policies. 

Q. How long previous to his death had they lapsed ? A. I can not 
positively say. 

Q. Well, about how long ? A. It is some time since I have 
given particular attention to this ; you will find it all in the Miller 
examination ; it lias all been gone into and presented. 

Q. Well, I understand it was copyrighted by some hocus-pocus ? 
A. I don’t know about any hocus-pocus; we copyrighted. 

Q. He was the son of the president; and was he connected with 
any of the other directors in any way ? A. No, sir, I think not; not 
to mv knowledge. 

v co 

Q. Were some of those policies on which he had paid a single 
premium, or several of them ? A. I think not; not as I recollect 
now. 


Q. Were not some of them policies on which he had not paid any 
premium ? A. No, sir. 

Q. Except in this way; the agents or those connected with the 
company were allowed twenty-fiv r e per cent for business brought to 
the company, and where he took a policy, and say the commission 
he received was twenty-five per cent, that twenty-live per cent was 
credited to the first quarter’s premium, and neither of the premiums 
for the other quarters paid ? A. Nothing of the kind. 

Q. You are sure of that? A. To the best of my recollection and 
belief; they were all policies which had been in existence for a certain 
period on the company’s books, and paid for in the usual way. 

Q. Were not some of them upon which not a dollar had been paid 
but in that way I have mentioned ? A. No, sir. 

Q. That he had been allowed twenty-live per cent for bringing in 
business, and that was credited on the first payment; and then the 
policy was allowed to lapse, the balance of the three payments never 
being paid ? A. Never, to my knowledge. 

Q. Was there a single one that has been in existence a year and 
not lapsed ? A. I think they had all been in existence; of course I 
am not positive of things that took place ten years ago. 

Q. This thing was developed in the Miller examination; wasn’t 
it? A. Yes, sir. 

Q. It was positively corroborated, was it not? A. Yes, sir. 

Q. By whom ? A. By the Mutual Life Insurance Company of 
New York. 

Q. Your company? A. Yes, sir. 

Q. That testimony was taken before the legislative committee, 
was it not? A. No, sir. 


280 


Q. Before whom was it taken? A. Before the Superintendent of 
the Insurance Department. 

Q. Was it not taken before a legislative committee ? A. No, sir; 
there was an examination before a legislative committee, but this 
was evidence taken before the Superintendent of the Insurance 
Department, who examined it; we employed our own stenographer 
to take our minutes and we copyrighted the whole thing. 

Q. You copyrighted the testimony taken on the occasion ? A. 
Yes, we did. 

Q. Has it ever been published except as your company control it ? 
A. I don’t know what the superintendent did with his minutes; he 
had his stenographer there. 

Q. Was not your copyright obtained for the purpose of prevent¬ 
ing the general publication of the minutes ? A. We copyrighted 
our minutes— 

Q. Please answer the question ; was not your copyright obtained 

for the purpose of preventing the publication of the testimony ? A. 

I don’t know as I can answer; I did not copyright it and cannot 

state what the board or the members of the committee mav have 

1/ 

done, or what their object was. 

Q. Did you take part in copyrighting it? A. I don't think I per¬ 
sonally had any thing to do with it. 

Q. Will you say you did not ? A. I will not say any thing about 
it. 

Q. Who was the person that copyrighted it? A. I cannot say. 

Q. Will you say you did not do it yourself? A. Yes, I will say 
that. 

Q. Has there ever been a copy of the testimony published to your 
knowledge ?' A. I have heard of several copies being in existence. 

Q. Where? A. I cannot specify at the present time. 

Q. Can you specify where you saw one ? A. I have seen portions 
of it published in the newsjiapers. 

Q. I mean the testimony as a whole ? A. I cannot 
particular place. 

Q. How soon after it was taken was it copyrighted ? A. That I 
cannot say. 

Q. About how soon ? A. It is not fair to ask the question, because 
I have no more knowledge than you have. 

Q. You say you knew it was copyrighted? A. I know as a mat¬ 
ter of general observation that we took the minutes and copyri 
them. 

Q. Was it very soon after, within six months? A. I should think 
very likely. 

Q. Was it not within two months that you copyrighted it? A. 
That I don’t know. 

Q. Did your company ever have the testimony printed ? A. Yes, 
sir; we did. 

Q. The whole of it? A. Yes; we did. 

Q. Did you ever distribute any copies of it ? A. I think we did ; 
a few to our friends. 

Q. How many ? A. I cannot tell. 





281 



Q. A dozen ? A. Yes; I should think so. 

Q. Were you connected with the company in 1865 and 1866 ? A. 
Yes, sir. 

Q. In what capacity? A. I think in 1866 1 was elected vice- 
president; it was either 1865 or 1866; previous to that I was one of 
the attorneys of the company. 

Q. After your connection with the company were there any 
bonuses voted to the officers of the company? A. Yes. 

Q. How much ? A. There was one. 

Q. When? A. I think the first year after I got there. 

Q. How much was that bonus? A. I don’t recollect. 

Q. Well, about how much? A. I think I got about $6,000. 

Q. How long had you been connected with th« company? A. 
Oh, I had been connected with the company over a year. 

Q. You got $6,000 for your shire? A. Yes; whatever was due 
to me. 

Q. Six thousand dollars was your share of the bonus, wasn’t it? 
A. Yes, sir. 

Q. How much did the aggregate of the bonuses amount to ? A. 
I have no recollection, sir. 

Q. Can’t you give us within a half of a million ? A. Hardly. 

Q. By whom was the bonus voted; it was voted to the officers of 
the company? A. Yes, sir. 

Q. What officers? A. Well, now, speaking from the record of 
the company, that matter came up on a letter the actuary addressed 
to the board— 

Q. Please answer my question, what officers it was voted to? A. 
Well, sir, it was voted to the president, the actuary, to myself, and 
I think, to the secretary ; I don’t know; I never got it but once,and 
have not thought of it since. 

Q. Who was the president? A. The president was Mr. Winston. 

Q. How long had he been president then ? A. He has been presi¬ 
dent, at this date, for about twenty-five years; he had been president 
then about fifteen years. 

Q. Who was the vice-president that preceded you ? A. They had 
none. 

Q. Who was secretary ? A. Isaac Abbott. 

Q. Who was actuary ? A. Shepherd Homans. 

Q. Do you know how much the secretary received ? A. I don’t 
know, sir. 

Q. Was it larger or smaller than yours ? A. It was a question of 
percentages. 

Q. Can you tell whether the president received more or less than 
you ? A. I presume more. 

Q. Did he receive considerably more; he had been there longer 
than you? A. Yes, sir. 

Q. Can you give an approximation of what was received by the 
president ? A. No, sir, I cannot at the present time. 

Q. You say percentages; upon what' A. It was a matter done 
before I went into the company, so I don’t speak from personal 


282 


knowledge of this ; I think it was a percentage upon the net divi¬ 
dends of the company ; the theory was that the officers increased the 
dividends to the policyholders, and they were entitled to participate 
in the resolt of their labor to a certain extent; I presume it was so 
arranged that the president received more and the subordinates 
less. 

Q. You cannot approximate to the amount of that? A. It is so 
long ago ; it was a matter of no interest to me when. 

Q. Have you copyrighted that or not ? A. I have not looked at 
it since that time. 

Q. Have you any objection to furnishing the committee with a 
copy of the testimony taken at that examination ? A. Hot the 
slightest; I will furnish it to you with pleasure; if the chairman will 
allow me to make a remark with regard to the bonus question ? I 
wish to say that I have no concealment at all to make; the counsel 
asked me certain questions about things that occurred ten years ago; 
and I cannot answer a specific question but in a general way; I am 
familiar with the general reason which led to the granting of the 
bonuses by the trustees and to their abolishment; if the committee 
would like to hear it, I will give them the whole history; speaking, 
not of my own personal knowledge, but from the records of the 
company, and from general information upon the subject, I say as 
follows: the matter of allowing to certain officers of the company 
some sums in addition to their salaries was first brought up by a 
letter addressed by the then actuary of the company to the president, 
in which he sustained the policy of allowances paid to officers of 
other companies, notoriously the marine insurance companies and 
some of the fire companies, which allowed their officers very large per¬ 
centages at that time upon the business procured by them, or the 
profits of the company; this letter went into considerable detail, and 
gave the names of the officers and amounts received ; he requested 
that it be considered, I think, by the board of trustees; the letter 
was taken up, referred to a committee, was discussed and a written 
report made to the board, which was acted upon and entered upon 
the minutes; the committee discussed the matter at great length ; 
the theory, as I have remarked, was that it was wise to recognize the 
honesty, the energy, skill, and economy as well of the officers by 
awarding to them some share of the result of their labor, and if the 
percentage so granted were made dependent, not upon the aggre¬ 
gate assets, but upon the net profits divided to the policyholders, the 
policyholders had no right to complain of any such allowance; the 
principle being similar to that adopted by many of the leading 
merchants, and, indeed most of them who allowed to their assistants 
and clerks profits upon the sales made in their department; these 
were the things which influenced the board of trustees; they adopted 
a scale, but what it is I have now forgotten, but have not the 
slightest objection to communicate, because it lias been gone over 
half a dozen times by legislative committees, the board of trustees, 
the Insurance Department and other people; there is no conceal¬ 
ment about it; subsequently we discovered it gave rise to comments; 
it was not appreciated among persons, many of whom did not look 


v 


283 


at it in that light, and thought it an improper award to the officers ; 
the board of trustees appointed a committee to examine it and 
* make a report thereon; and after being in existence one, two or 
three years they abandoned it; that is the whole story. 

Q. These bonuses were awarded to the officers for two or three 
years? A. Yes, sir, and I came in at the heel and got only one of 
them. 

Q. Not to exceed three years? A. I think not; I think it was 
only in force, certainly not over three years. 

Q. What officers had received it before you came in ? A. The 
president, actuary, and the other officers whoever participated in it: 
I don’t recollect now who they were. 

Q. Now, was it not a fact that in 1866 Mr. Winston received 
$90,000 for his bonus in a single check? A. No, sir. 

Q. In either of those years ? A. No, sir, it was not. 

Q. Or substantially that ? A. No, sir. 

Q. What was the then salary of the president ? A. I cannot tell 
you. 

Q. About what? A. W_ll, what year do you say? 

Q. Say 1866, when you came in ; independent of the bonus? A. 
I cannot say what his salary was. 

Q. About what? A. Well, it was not over $6,000 a year. 

Q. Was the salary raised at any time? A. Yes, it has been raised 
from year to year. 

Q. You say it was about $6,000 a year when you went in? A. 
Yes. 

Q. How soon after vou went in was it raised ? A. I cannot 
say. * " # 

Q. About how soon ? A. Well, it has not been raised any year 
very suddenly. 

Q. If you will, give us the first raise—how soon after you came 
there ? A. If you desire it, I will refer to the books and send it up 
by letter. 

Q. I should like to have you approximate it as near as you can ' 
A. I don’t see that I can. 

Q. Can’t you tell about how soon after you went in there the sal¬ 
ary was raised? A. If the witnesses had any idea of the questions 
you were going to ask them, they would undoubtedly familiarize 
themselves with the subject, as I should have tried to do. 

Q. Can’t you tell us how soon after you went there the salary was 
raised ? A. The president’s salary was last raised, to my recollection, 
in 1869; I cannot tell you the first raise. 


By Mr. Moody : 

Q. How much is it now ? A. Thirty thousand dollars. 

Q. It was raised several times until it reached that amount ? A. 
Yes, sir; and in 1869 it reached that sum; what previous advances 
w T ere made I cannot say. 


284 


By Mr. Moak : 

Q. I would like to get the raises that were made, and about when ? 
A. I will send them to you by letter. 

By Mr. Wei ant : 

Q. Have you no recollection about when it was raised ? A. Ho, 
sir ; how can I ? 

The Chairman —You cannot expect the man to carry it in his 
head ; if it is essential, the exact raises should be given to the com¬ 
mittee, how much this year and how much that , the books will show 
it; and Mr. McCurdy says he will give it to the committee, for the 
purposes of the committee; the fact that he has said it was $6,000 
when he went there, and is now $30,000, is sufficient; if it is not, 
let us have the exact dates. 

Mr. Moak —I ask him to approximate ; and, it seems to me, the 
man who has the general management of the business ought to have 
some general idea of it; I did not ask him for the exact dates or 
months ; a witness on the stand m a court of justice, who had been 
intimately acquainted with the transactions, would be required to 
approximate, and most witnesses would. 

W itness —If you will allow me, I will state why I cannot; it is 
the custom of the finance committee to refer the question of the sal¬ 
aries of officers and clerks to a sub-committee; that committee makes 
an investigation and reports to the committee ; the committee and 
officers go over and fix the salary of every officer and clerk in the 
establishment for the year. 

Q. It is the increase for one year, and it seems to me you should 
know that ? A. I know that, but to ask me whether ten years ago 
the president’s salary was raised $1,000 or $2,000, I cannot recol¬ 
lect. 

Q. My question was to give us, as near as you could y how soon 
after you went there the president’s salary was raised ? A. That I 
cannot tell. 

Q. Y r ou cannot approximate it? A. Ho, sir. 

Q. Can you give an approximation of the amount of the increase 
of the president's salary,after you went there the first time? A. Ho, 
I cannot tell. 

Q. Y ou cannot even approximate to it ? A. Ho, sir ; I have no 
recollection. 

Q. YT>u say you cannot give the amount of the increase until 
1869 ? A. I think I am in error in that date; I think there was an 
increase in the president’s salary in 1869, which I had in my mind 
at the time, but that the last increase of the president’s salary took 
place in 1872. 

Q. How much was the president’s salary increased to in 1869 ? A. 
In 1869, I think, it was then in the neighborhood of twenty-one or 
two thousand. 


285 


Q. It was increased, you think, in 1869, to twenty-one or two 
thousand ? A. That is only my impression ; I have not looked at 
the books. 

Q. In addition to that, did the president receive any bonus, or has 
he ever received any bonus on account of his services after 1866 ? 
A. Not after the time the bonus was abolished by the board of trus¬ 
tees. 

Q. In 1866, you mean ? A. If that was the date when it was 
abolished by the board of trustees. 

Q. It was about that time, and you say you only received one 
bonus? A. Yes, sir. 

Q. And you received it as long as any one did ? A. Yes, sir. 

Q. Since that time has the president received any sum on account 
of services, or alleged services, as president of the company ? A. 
No, sir. 

Q. When you became vice-president, how much was your salary 
tixed at, independent of the homes ? A. Six thousand dollars. 

Q. IIow soon after you went in was your salary raised? A. Three 
or four years. 

Q. Hou much was it raised to ? I can’t tell you now. 

Q. Give us the best recollection you have upon the subject ? A. 
Well, I think it was raised from six to eight thousand. 

Q. How long did it continue at eight thousand ? A. Well, a year 
or two ; you can divide it up into ten or eleven years; I think it 
went from eight to twelve. 

Q. How long did it continue at twelve? A. Well, two or three 
years ; I am talking a good deal at random. 

Q. I am only asking you for your recollection ? A. I will give 
you day and date of every increase, and the amount of it, if the com¬ 
mittee desires it. 

Q. Was it raised again from twelve ? A. Yes. 

Q. IIow T much was it raised to then ? A. I think it was raised, 
perhaps, to its present amount. 

Q. How much is that ? A. Eighteen thousand (18,000) dollars. 

Q. How long has it been eighteen thousand (18,000) dollars? A. 
Since 1872 or 1873. 

Q. And have you received on account of your services anything 
except the regular salary of $18,000 a year since that time ? A. 1 
have not. 

Q. Any commission upon any sum or fund ? A. Not upon any 
thing. 

Q. Take the secretary’s salary, how much has it been since 1873 ? 
A. The present secretary, Mr. Lloyd, has been in the office only 
„ about a year ; his salary is $5,000 ; prior to that the secretary was 
the late John M. Stewart, who was made second vice-president; he 
had been connected with the company, I think, about nine years; 
his salary commenced when he came in as secretary ; I think he got 
$6,000 a year; I am not quite sure ; and it was gradually raised. 

Q. To what ? A. Until he got, well, whatever the sum in the 
table is ; you are getting at the other salaries, and you have got all 
that in the report I sent you. 


286 


Q. We have got the report of last year? A. Well, it was raised 
to that. 

Q. Then this gentleman who was in last got less than the present 
secretary ? A. No, sir, he got more. 

Q. He got $5,000 ? A. No, sir; the present secretary gets $5,000 ; 
he has been secretary about a year; lie has had no advance to his 
salary since he has been made secretary. 

Q. The old secretary got more? A. Yes, sir. 

Q. Your present report would give no indication of what it had 
been ? A. Not prior to last year, if that is what you are after. 

Q. 1 am asking what the preceding secretary got for his services ? 
A. Well, that requires a little computation ; Mr. Stewart died in 
February or March, and he was elected second vice president a year 
ago February or March, and up to the period of his being elected 
second vice-president he drew the salary as secretary, and after that 
he drew it as second vice-president, but it was just the same and was 
not increased from what it was when he was secretary ; the now sec- 
etary, Mr. Lloyd, who had been auditor, received a salary of $5,000, 
and in February or March he was made secretary, but his salary was 
not increased. 

Q. That I understand, but it does not answer the question how 
much the salary of the last secretary was the last year of his term ; 
that states what Mr. Lloyd received last year ? A. No, it does not; 
that states what the office got. 

Q. Can’t you state how much the former secretary got ? A. I 
don’t think I can get at it exactly, because I cannot give you the 
date. 

Q. Approximate it as near as you can ? A. The salary of the 
second vice-president paid last year was $12,400, for the period 
during which he was second vice-president; it does not comprehend 
the full year. 

Q. My question was a very simple one, and that was, how much 
the salary of your secretary was the year previous to the time when 
your present secretary took the office? A. It was just the same as 
that of the second vice-president; there was no second vice-president 
before. 

Q. How much was it? A. I think it was at the rate, say, of 
$12,400. 

Q. You think the previous secretary received $12,400? A. Yes, 

1 think so. 

Q. Has he received any additional salary as second vice-president ? 
A. No, sir ; he did not. 

Q. No additional salary ? A. No, sir. 

Q. Hid he, in fact, perform the duties of secretary, and was his 
position as second vice-president nominal, or did some one else per¬ 
form them ? A. Do you mean secretary and second vice-president ? 

Q. You say he was secretary and second vice-president? A. No, 
he was not; for the last year of his life he was second vice-president, 
and performed the duties of that alone. 

Q. How much did he receive? A. Twelve thousand four hundred 
dollars. 


287 


Q. When did he die ? A. In December, I think. 

Q. How long had he been second vice-president? A. Since about 
a year ago. 

Q. And previous to that time he had been secretary? A. Yes, sir. 

Q. And as secretary he received the same salary that he did as 
second vice-president during his life ? A. Yes, sir. 

Q. Had there been any such office as second vice-president until 
he was elevated to that position ? A. Ho, sir, there was not. 

Q. And when he was elevated to that position, Mr. Lloyd was 
elevated from auditor to secretary? A. Yes, sir. 

Q. For how many years had Sir. Stewart, as secretary, received 
the salary of $12,400; or about how many? A. I think two, three 
or four years; the raise in his salary had probably gone on as the 
board thought he was entitled to it. 

Q. Was his salary raised at the same time the salary of the other 
officers was ? A. I can’t say ; there never has been any rule about 
that. 

Q. About how much was his salary just previous to the time it 
was raised to $12,400; or about what ? A. I doubt whether the 
board would raise it more than $1,000 or $2,000 a year, or some¬ 
thing like that. 

Q Have you any statement of how much was paid by your com¬ 
pany last year for advertising ? A. Ho, sir, I have not. 

Q. Is anything stated in your last annual report in regard to that ? 
A. Do you mean the one tiled with the department or not ? 

Q. Yes? A. I can’t say. 

Q. Have you with you a copy of your last annual report ? A. I 
have a copy of the report printed by the company, but whether it 
contains the items in detail I don’t know. 

Q. I see here an item, cash paid for the following items, namely, 
exchange and postage $56,375 ? A. Yes, sir. 

Q. That was paid during the year 1875 for postage and exchange? 
A. Yes, sir. 

Q. What do you mean by exchange and postage ? A. I mean to 
say that is what is charged by the agents in their accounts for this 
item. 

Q. What do you mean by exchange ; what does it include? A. It 
includes the price they pay for drafts on Hew York. 

Q. And for that and the postage, the expense to the company was 
$56,375 during the year 1876 ? A. That is a copy of the sworn 
report. 

Q. Printing and stationery, $62,144.13; what does that include? 
A. It includes these books; "they contain the company’s report to the 
policyholders. 

Q. How much do they cost ? A. About seven cents a piece. 

Q. How many do you have of those ? A. About 25,000. 

Q. What else does it include? A. It includes publishing the 
mortality experience of the company during the past year. 

Q. How much does that cost ? A. About fifty dollars a copy. 

Q. How many copies of those do you have ? A. I think we had— 
I can’t say how many copies. 


288 


Q. Well, about how many? A. We must have several hundred 
of them, because we distribute them to actuaries of "societies in this 
country, and Great Britain. 

Q. To exceed 300 ? A. Possibly not; I can’t say. 

Q. What else did it include? A. You are speaking of printing 
and stationery? 

Q. Yes ? A. It includes all the books for the office; all the cir¬ 
culars, canvassing documents and miscellaneous literature, if it may 
be dignified by that term, which the company gets off on the unsus¬ 
pecting candidates for insurance. 

Q. Bills, etc.? A. Yes. 

Q. Contingent guarantee, $56,185; what is that? A. That is 
$561.000; the contingent guarantee fund was $654,842.59 last year. 

Q. What is that fund ? A. That is a fund set aside, as its name 
indicates, as a permanent guarantee fund to secure the company in 
any contingency, against possible depression of its assets, owing tO' 
business depressions similar to that through which we have passed 
during the past three years ; it is a sinking fund, in other words 
reserved out of the profits of the business. 

Q. And that is set apart from what source ? A. As I tell you, 
from the surplus made over and above our dividends. 

Q. Now we come to law expenses, $33,296 ? A. Yes, sir. 

Q. What was that paid for ? A. That seems to have been made 
up, I should think, mostly out of the salary of the solicitor, which 
is given here. 

Q. How much is the salary of the solicitor ? A. Fourteen thou¬ 
sand four hundred dollars ; then you get $17,715 paid to attorneys 
and counsel. 

Q. Where was that paid, and to whom was the largest sum paid, 
other than the sum paid to the solicitor ? A. I think I have got 
that information ; you asked Mr. Lloyd when he was here, to furnish 
you with that information, and I accordingly made a requisition on 
the law department for the information ; Judge Palmer writes me 
the following letter, which I submit, addressed to m 3 7 self. 


The Mutual Life Insurance Company of New York, ) 
Law Department, 140 to 146 Broadway, V 

New York, March 26, 1877. 1 

Biciiard A. McCurdy, Esq., Vice-President Mutual Life Insurance 
Company of New York. 

Dear Sir. —In answer to your inquiry in respect to attorneys and 
counsel doing business for the company, and as to the nature of their 
employment, I beg to report; That, except the solicitor, there are 
no attorneys or counsel emplo} r ed by the company on salary ; that all 
the legal business of the company is supervised by the solicitor ; and 
only such counsel and attorneys as are required, from time to time, 
to assist in the proper discharge of the duties of this department, are 
emplo) 7 ed by him, and these must be so employed with the assent 
and concurrence of the executive officers. 


280 


There are two classes of business in which such assistance is 
required ; 

1 . Litigated business in the different States of the Union in respect 
to unlawful claims. 

2 . In mortgage foreclosure cases. 

In respect to litigated business, other than in foreclosure cases, 
such counsel are employed from time to time as the exigencies 
require, in the locality where it occurs, at the ordinary compensation 
of the profession for the service rendered. 

In respect to the second class of professional service, namely, the 
foreclosure of mortgages, when such foreclosure becomes necessary 
the business has been distributed among the following firms, namely 
Davies A Work, Turner, Lee A McClure, Dixon A Farnam, Develin 
A Miller, Sewell A Pierce, Matthews, Husted A Foley, New York 
city; Henry C. Murphy, Jr., Brooklyn, N. Y.; D. C. Robinson, 
Elmira, N. Y.; A. Q. Keasbey, Newark, N. J.; F. G. Burnham, 
Morristown, N. J.; Brown A Westcott, White Plains, Westchester 
county, N. Y.; George E. Mnmford, Rochester, N. Y.; D. W. Par- 
sliall, Lyons, N. Y; E. R. Bacon, Buffalo, N. Y. ; Augustus Har¬ 
rington, Warsaw, N. Y. ; Ward LIunt, Jr., L T tica, N. Y. 

The principal foreclosure proceedings for the past two years have 
been conducted by Messrs. Davies A Work; Turner, Lee A 
McClure; Henry C. Murphy Jr.; F. G. Burnham; Dixon A Farnam, 
D. C. Robinson ; A. Q. Keasbey, and Brown A Westcott, 

I have had occasion to employ the other firms but seldom, namely : 

Cases in Ca:esin 
18T5. 1870. 


Develin A Miller ..... 4 3 

Sewell A Pierce ..... 3 4 

Matthews, Husted A Foley .... 5 4 

George E. Mnmford . . . . . — 1 

D. W. Parshall . — 1 

E. R. Bacon . . . . . . — 1 

Augustus Harrington . . . . . — 1 

Ward Hunt, Jr. . . . . .1 1 


The above statement, I believe, answers fully your inquiry. 

Yours truly, 

O. H. PALMER, 

Solicitor. 


Attorneys and counsel , sometimes employed by the Mutual Life 

Insurance Company of JVew York. 

Foster A Baldwin, Boston, Mass.; William A. Porter, Philadel¬ 
phia, Penn.; Wayne Me Yeagh, Philadelphia, Penn.; McCalmont A 
Osborne, Franklin, Penn.; S. H. Reynolds, Lancaster, Penn.; J. 
Ross Thompson, Erie, Penn.; E. O. Hinkley, Baltimore, Md.; J. 
N- Steele, Baltimore, Md.; Robert Stiles, Richmond, Va.; Dye A 
19 







290 


liar ria, Indianapolis, Ind.; Lawrence Winston, Chicago, Ill.; Camp¬ 
bell & Lawrence, Chicago, 111.; George Willey, Cleveland, Ohio; 
Matthews, Ramsey & Matthews, Cincinnati, Ohio ; Sidney D. 
Miller, Detroit, Mich.; Holmes & Reynolds, Boone, Iowa ; McAllis¬ 
ter & Bergie, San Francisco, Cal.; Estes & Ellett, Memphis, Tenn.; 
Glover & Shepley, St. Louis, Mo. ; James A. Broadhead, St. Louis, 
Mo.; Carruth & Lieber, Louisville, Ky.; S. D. Leavitt, Eastport, 
Me.; Bion Bradbury, Portland, Me.; Clopton, Herbert & Cham¬ 
bers, Montgomery, Ala.; A. Q. Keasbey, Newark, R. J.; F. G. 
Burnham, Morristown, N. J.; D. C. Robinson, Elmira, N. Y.; W. 
R. Brown, Wiiite Plains, N. Y.; D. W. Parshall, Lyons, N. Y.; 
George E. Mumford, Rochester, N. Y. ; Augustus Harrington, 
Warsaw, N. Y.; Ward Hunt, Jr., Utica, N. Y.; Edward R. Bacon, 
Buffalo, N. Y.; Davies & Work, New York city; Turner, Lee & 
McClure, New York city; Dixon & Farnham, New York city; 
Develin & Miller, New York city; Sewell & Pierce, New York 
city; Matthews, Husted & Eoley, New York city; Henry C. 
Murphy, Jr., Brooklyn, N. Y.; George F. Danforth, Rochester, 
N. Y. 

Q. Is the amount stated there? A. No, sir; we cannot tell what 
they get for foreclosure. 

Q. I am asking whether the amount paid to each, independent of 
that, is stated there ? A. No, sir. 

Q. The amount paid to neither of those firms is stated there ? A. 
No, sir; did you ask for it ? 

Q. Certainly I did ? A. The memorandum Mr. Lloyd brought 
back was that the committee wanted the list of attorneys. 

Q. No; what we wanted was the amount paid? A. I heard it was 
claimed that large sums had been paid to certain attorneys, osten¬ 
sibly for law purposes, which ought not to be paid. 

Q. Does this $17,715 cover what was paid for foreclosure also ? 
A. We don’t pay any thing for foreclosure. 

Q. Why not? A. Well, the court awards the expenses; the costs 
are fixed by statute, to the attorneys selling the property, and they 
sell it and get the taxed costs. 

Q. But suppose you bought it in ? A. If we bought it in, they 
render their bill according to the rules of the courts, and it is added 
to the costs the property has to pay. 

Q. When an attorney bids in a piece of property which your com¬ 
pany instructs them to bid m. on foreclosure, he sends in his bill ? 
A. Yes, sir. 

Q. And you pay it? A. Yes, sir. 

Q. Is that included in the $17,715 which you have paid ? A. I 
think not; only the fees we pay ourselves and under our own 
control. 

Q. Can you tell us any thing about how much was paid for fore¬ 
closures during 1876, in addition to the amount you have stated ? 
A. No; and I doubt whether the records will show it. 

Q. Why not? A. It would be imperfect in the cases I speak of; 


291 


where the attorneys do sell the property they return the amounts to 


us. 


Q. 'I ou pay it and get a voucher for it? A. Yes ; I suppose we 
could get at it. 

Q. How many pieces of property did you foreclose, approximately, 
in 1876? A. That I can’t tell; you see there are a large number of 
cases where the interest is not paid within thirty days. 

Q. I understand perfectly well; you say this $33,296 does not 
include the amount paid for foreclosure? A. I should say not 

Q. I want to get at, if I can, the number of foreclosures you have ? 
A. \ ou see, in a company the size of ours, these things are done in 
departments, and we have general reports; the law department is 
as much distinct from the executive department as any lawyer’s 
office is from the railroad or bank he serves; if I had known you 
wanted this information I should have been happy to give it. 

Q. Can you approximate the amount of foreclosures in 1876? A. 
I cannot. 

Q. In your annual report you have an item, miscellaneous ex¬ 
penses; $12,889.85? A. Yes, sir. 

Q. What does that include? A. Well, it includes what you may 
call unclassified items that cannot very well be classified under »en- 

i " ® 

eral accounts. 

Q. Give us some idea of the largest of them ? A. There are no 
large ones. 

Q. There are no large ones ? A. I think not. 

Q. Can you give us some idea of the character of these items ? A. 
Those are such things as, for instance, our bills are presented every 
week to the committee on expenditures who examine and audit all 
of them; at the end of every week’s allowance there will be a lot of 
miscellaneous things which, in the end, amount to a very large sum. 

Q. They seem to amount to nearly $1,000 a week, on the average ? 
A. These are not only in the office but elsewhere; you ask me what 
they consist of? 

Q. I asked you to give some general idea what they were ? A. 
Eight or ten scrub women to scrub the main office ; those are not put 
down as salaried persons ; they are hired by the janitor; soap, cor¬ 
rosive sublimate to clean up the ink stands and marble, if it needs it. 

Q. And in your statement of salaries paid persons do you include 
the salaries paid persons who are engaged running the elevators in 
the building? A. No. 

Q. In what item of the expenditures does that appear? A. It would 
not appear at all, because there is no such expense. 

Q. I thought you had one in the building ? A. So we have, but 
it is run by the American Bank Note Company, who hire the upper 
floor and run it for their own convenience. 


By Mr. Wei ant : 

Q. Does that include any expenditures except what pertain imme¬ 
diately to the building itself, and keeping it in proper condition ? A. 
Well, as I said, it includes no items which are not every week sub¬ 
mitted to a committee and by them verified ; it is odds and ends, 


292 


such as telegraphing, hack hire and things of that kind that may be 
necessary in the transaction of business ; they go into the petty cash 
and all these items come in. 

Q. Are you prepared to say there is not any item that comes to 
$1,000? A. Yes, sir; say that right off. 

Q. Have you, since you have been connected with the company, 
traveled at all at the expense of the company or where the company 
has paid the expenses? A. Yes, sir. 

Q. Where ? A. I traveled up to Albany last night. 

Q. I did not ask you to be facetious ; suppose you answer the ques¬ 
tion fairly in the sense in which it is put ? A. I will endeavor to do 
so ; I have traveled to Boston and Philadelphia, and I think made a 
trip west a good many years ago, of some weeks duration, on the 
business of the company. 

Q. Any where else? A. Well, yes; I think in 1870 or 1871, 1 
visited London and Paris and the company made me a little allow¬ 
ance on account of my expenses on account of some business I trans¬ 
acted for them. 

Q. How much did the company allow you for that ? A. I think 
$900; half of my expenses I believe. 

Q. Well, any where else? A. As I said if I travel in the service, 
of the company, they pay my expenses. 

Q. Have you been to Europe more than once since in the service 
of the company, on which they paid part of the expenses ? A. Ho, 
sir. 

Q. Has the company paid any part of your expenses during your 
vacation? A. Ho, sir; never. 

Q. Hot any thing? A. Ho, sir. 

Q. Or during any time when you have been away, except when 
you have been away strictly on the business of the company, except¬ 
ing, of course that time you went to Europe ? h . Ho, sir ; at that 
time the company had legitimate business in London ; I went away 
and was gone about seven weeks ; the president wrote me when I 
was in Paris to go to London and attend to some business there; I 
went there and did so, and when I got back they said that it would 
have cost them a good deal more to have it attended to the other way 
and they allowed me one-half of my expenses. 

Q. How much have the expenses allowed you amounted to, inde¬ 
pendent of the $900, for the past ten years ? A. I very rarely do go 
away ; it is a trifle and don’t amount to any thing ; pehaps $100 or 
$200 a year. 

Q. Have the expenses of the president when away from the office 
been paid, during the past ten years, to any extent? A. Yes, sir. 

Q. To what extent ? A. I think they have been paid twice on 
trips to California. 

Q. Within how long a time ? A. Within five years. 

Q. How much do you say was paid at each time? A. Well, I can¬ 
not say; those trips I think were made partially on business of the 
company, and partly for the benefit of his health. 

Q. I want to get approximately the expense each time paid by 


293 


your company? A. Well, according to the prevailing rates, ten dol¬ 
lars a day is a pretty liberal expense for a man traveling, is it not ? 

Q. That may be, but that would not indicate at all what was paid ? 
A. Well, nothing was paid that he did not spend. 

Q. Can't you approximate to the sum that was paid on each occa¬ 
sion ? A. No, I cannot. 

Q. Was it $5000? A. No such sum as $5000; but if you would 
like the amount I will get it out and send it to you. 

Q. Now, has the company paid the expense of the traveling of 
any other of its officers, during the past five years ; I speak of offi¬ 
cers now as distinguished from agents ? 4. We don’t pay our trav¬ 

eling agent’s expenses, or any agent’s traveling expenses. 

Q. I didn’t say you did; I told you what I was speaking about and 
therefore wished to distinguish between the two ? A. No other of 
its officers receive anything—wait a moment, yes, sir. 

Q. Whom? A. Well, it would be such a case as when Mr. Lloyd 
came up here the other day; I think he may have made a trip or 
two somewhere besides that for the company; that I can’t tell ex¬ 
actly ; nothing of any amount, if that is what you want to get at. 

Q. How much is the aggregate of the traveling expenses of offi¬ 
cers, other than the president and vice-president, paid during the past 
five years ? A. It has not aggregated $500 a year, the whole of it. 

Q. You pay no expenses to traveling agents ? A. No, sir. 

Q. Do you have general agents? A. Yes, sir. 

Q. How many in all ? A. Fourteen. 

Q. Is that a list of them? A. Yes. 

Q. How are they compensated for their services ? A. They are 
compensated by commissions on the premiums obtained by the sub¬ 
agents whom they appoint. 

Q. Take Mr. Merrill, where is his office ? A. In Detroit, Michigan. 

Q. How much, approximately, have been his receipts for business 
done for the company within the past five years, say on an average 
per annum ? A. I can give you some idea about the gross receipts, 
but the net receipts I cannot. 

Q. The gross receipts is what I ask ? A. Well, I would like to 
say a few words on this subject. 

Q. Probably you had better answer my question, and then make 
an explanation as to all of them ? A. I had a paper with me, but I 
must have left it at the hotel; I brought up a paper with me as you 
•requested Mr. Lloyd to furnish the information; if you will pass 
that over I will get the information and bring it to you. 

Q. Is Mr. Merrill in any way connected with the officers of the 
company, or with any of them. A. 4 es, sir. 

Q. To whom and what ? A. He is the son-in-law of the presi¬ 
dent. 

Q. How long has he been the general agent for Michigan, Indi¬ 
ana, Illinois, Wisconsin, Iowa and Minnesota? A. He has been so 
about twenty years.- 

Q. Previous to that where did he reside ? A. He resided imme¬ 
diately prior to that, I think, in New Orleans; and prior.,to that in 
the city of New York. y 


294 


Q. How long Lad he been gone from the city of New York ? A, 
Before being sent there ? 

A. Yes ? A. Oh, that was before my time. 

Q. I want to get at substantially whether he went from New York 
for the purpose of taking charge of the business ? A. He did. 

Q. Can you give an approximation of his receipts for the last 
fifteen years per annum on the average ? A. No, but I have got 
the amount for the last two years which you requested Mr. Lloyd to 
bring up. 

Q. Would the last two years represent as much as his receipts 
had been previous to that per annum ? A. They would represent 
more, probably, because you see commission accounts increase every 
year. 

Q. No, that would scarcely be, would it, if the insurance is 
stopped, because agents only get for a few renewals ? A. Yes, but 
the most of his business was done under the ten and five per cent on 
renewals which we discontinued 

Q. What do you mean by that? A. I mean the old system of 
paying commissions to agents by the Mutual Insurance Company 
was to deal directly with every local agent; we had some two thou¬ 
sand of them and used to pay ten per cent on the first premium and 
five on renewals. 

Q. Perpetually? A. Yes, sir, as long as the policy runs. 

Q. That is the character of Mr. Merrill’s business with the com¬ 
pany ? A. Yes, sir. 

Q. Well, then, it would not increase any, would it? A. Yes, sir r 
a new policy added to the amount makes an addition, and if the 
business is kept up by new policies, more than those that terminate 
by death and surrenders, the amount would increase. 

Q. Well, now, take Mr. Bresee, agent for Virginia,West Virginia,, 
and several of the States adjoining. A. Yes, sir. 

Q. Is he any way connected with any of the officers of the com¬ 
pany ? A. No, sir. 

Q. Or with any of its directors? A. No, sir, not that I am 
aware of. 

Q. How long has he been general agent ? A. Since before the 
war. 

Q. His headquarters are at Baltimore? A. Yes, sir, they used to- 
be at Biclnnond. 

Q. Neither he or his family are in any way connected with the 
officers of the company ? A. No, sir, not that I am aware of. 

Q. Take Mr. Jennings, is he in any way connected with any of the 
officers of the company ? A. No, sir. 

Q. Take Mr. Nichols, is he in any way connected with any of the 
officers of the company or employes ? A. No, sir. 

Q. Well, take Mr. Brown? A. No, sir. 

Q. Or Mr. Boardman? A. No, sir. 

Q. Or Mr. Smith? A. No, sir. 

Q. Or Mr. Little? A. No, sir. 

Q. Or Mr. VanUxem? A. No, sir. 

Q. Or Mr. Sherman ? A. No, sir. 


295 


Q. Or Mr. Byington ? A. No, sir. 

Q. Or Mr. Hopkins ? A. No, sir. 

Q. Or Mr. Raymond ? A. No, sir, none of them. 

Q. Are any of your medical examiners in any way connected with 
Mr. Jennings ? A. No, sir, not that I am aware of, neither of 
them. 

Q. Has not Mr. Jennings a father connected with you in some 
way ; is he a young man ? A. No, sir, a little over fifty. 

Q. Has he not a son connected with your company as medical 
examiner ? A. I guess you have got it mixed up; there is a Dr. 
Jenkins connected with the company in Ohio, but this is Jennings. 

Q. Y ou have an item here of $82,258.54, for advertising during 
the year 1876 ? A. Yes. 

Q. That is exclusive of what was paid for printing and stationery? 
A. Yes, sir. 

Q. Was that amount actually paid by the company? A. Yes, sir. 

Q. Did any officer of the company receive any part of it, either 
directly or indirectly, or commission upon it? A. Not a dollar 
upon it. 

Q. How was the advertising done; does any one have charge of 
it ? A. Some of it is done through agents and agency accounts; the 
laws of several States require us to publish our statements a certain 
number of times, sometimes in the State paper, and in other instances 
in a particular county where we do the business; these are charged 
in the agent’s accounts and they send us receipted bills; other ad¬ 
vertising is done from the home office directly and with the papers 
themselves. 

Q. By whom ? A. By a gentleman named Elick, connected with 
the department. 

Q. Does he receive any commission on the advertising? A. No, 
sir ; if he did he would leave his place in two hours or one hour, or 
less. 

Q. If you found it out, you mean ? A. Yes. 

Q. About what is the expense of advertising at home—in the city 
of New York A. The item paid was $32,000 odd; I should think 
that there ought to be two-thirds of it done from the home office. 

Q. The other third is done in the city of New York? A. No, it 
is done around the country. 

Q. Do you mean two-thirds of it is done at the home office ? A. 
Yes, that is what we do at the home office. 

Q. In the city of New York ? A. Yes, in the city of New York 
and vicinity, and advertisements that relate directly to the company, 
that we issue from the home office. 

Q. About what proportion was paid for advertising in the city of 
New York and Brooklyn? A. Well, possibly I should think a third 
of it, may be more; I can’t tell; I should say, on an estimate, per¬ 
haps $15,000 was paid for advertising in the city of New York and 
Brooklyn. 

Q. You have an item here of $213,533,73 paid for commuted com¬ 
missions ? A. Yes, sir. 



296 


Q. To whom was that paid, the principal part of it? A. Paid to 
general agents and other agents. 

Q. Give us some of the amounts, as near as you can get at them ? 
A. Well, if a man has a commission account and he finds it neces¬ 
sary to commute we do it. 

Q. My question is for you to explain to whom it was paid, as near 
as you can? A. I think we paid some commission to Mr. Bresee. 

Q. Well, to what extent from him ? A, I cannot tell you. 

Q. Can you give us some idea ? A. Well, you see this is a kind 
of transaction that goes off in the ordinary way, and a transaction 
that we deal with very simply, and it is very plain ; a man writes to 
us, I want to sell my commission, and I tell him to go to the actuary. 

Q. Can’t you give us some idea who receives some part of it; it 
is a pretty large amount, and some one should have a pretty definite 
idea ? A. It is a matter of ordinary business, ground out according 
to rule, and don’t make a cent’s worth of difference with your ordi¬ 
nary business of the company ; I would just as lief say every one of 
the agents has been paid. 

Q. Well, take Mr. Merrill, did you buy of him? A. Ho, sir; 
unless some of them are what are called flat brokerage items. 

Q. What do you call that ? A. Well, we give them twenty-five 
per cent down and no renewals ; buy the whole thing at once. 

Q. Can you give any idea of how much Mr. Bresee received ? A. 
Ho. 


Q. And was it those persons you have named as general agents 
who received that during the year? A, Yes, sir. 

Q. Is that included in the statements of your general amounts 
received by the agents which you said you would furnish us ? A. I 
think it is; I have got it at the hotel, I am satisfied. 

Q. Does that include this $213,000 odd, paid for commuted com¬ 
missions ? A. Yes, sir ; you are talking about the pay to the general 
agents now, I suppose. 

Q. It goes to the sub-agents, to a certain extent, I suppose? A. 
Of course it does ; it is not paid to them to put in their own pockets; 
it goes all over the United States in driblets to this one and the 
other; a good many people have a portion of it; we don’t deal with 
sub-agents, but they all get their portion. 

Q. Can you give us an idea of the amount paid Mr. Merrill in 
twenty years for the business of your company ? A. The gross 
amount ? 

Q. Yes? A. That would not afford you any idea of what the 
business was. 

Q. I want to get at it as near as you can give it to me, if you will 
do so? A. Well, I can’t. 

Q. ITas it exceeded several million ? A. Ho, I guess not. 

Q. How much has it gone to? A. I don’t know; I heard Mr. 
Merrill say his business was worth about $15,000 a year to him; he 
has been at it twenty years, and it ought to be- 

Q. How much did you pay for commuted commissions in 1875 ? 
A, The report will show it. 

Q. Well, where abouts is it? A. Here it is, $280,000. 


297 


Q. 1. ou paid $280,000 for the same purpose in 1875? A. So it 
appears by the report. 

Q- 1 our income during the year was $15,122,894,61 ? A. Yes; 
that is the report, 

Q. Of what did that income consist ? A. It consisted of premi¬ 
ums, receipts and interest upon investments. 

Q. Any thing else ? A. No. 

Q. In addition to that, you received for annuity $13,808,75, did 
you not ? A. Yes, sir, so it appears. 

Q. In the first place, your company is strictly mutual and has no 
capital ? A. Entirely so. 

Q. Do you do any business on what is called the Tontine princi¬ 
ple? A. We do not; we have a few old policies. 

Q. How many policies have you ? A. I don’t think we have a 
hundred, all told 

Q. Very small amount? A. Yes. 

Q. How many directors have you ? A. Thirty-six. 

Q. Who are they elected by ? A. The policyholders. 

By Mr. Husted : 

Q. You have no directors, have you? A. No, they are trustees. 

By Mr. Moak : 

Q. When is the annual election held? A. In June, sir. 

Q. Were you present at the last annual election ? A. I was. 

Q. How many votes were cast at the last annual election ? A. 
Something over a hundred. 

Q. Do you mean a hundred ballots? A. Yes, sir. 

Q. Representing how many policyholders? A. Well, a hundred 
policyholders. 

Q. Ballots were cast representing a hundred policyholders ? A. 
Well, I should think there was; by a hundred people. 

Q. Representing a hundred policies? A. There were none cast 
by proxy; there were about a hundred votes cast. 

Q. And none of them were cast by proxy ? A. Not one of them. 

Q. How many policies did you have in tlie company at that time? 
A. Ninety odd thousand. 

Q. And a hundred of them voted ? A. Yes, sir. 

Q. Where do those persons who voted reside ? A. Most of them 
in the city of New York. 

Q. All of them, principally? A. I don’t know who they were. 

Q. How many outside of the trustees themselves? A. They 
don’t half a dozen of them vote. 

Q. How many of the officers are policyholders? A. Every one of 
them. 

Q. How much has the president; to what extent ? A. I don’t 
know now; he had an endowment which has matured in the com¬ 
pany paid to him a short time ago. 

Q. How much was that? A. I think $10,000. 

Q. How much insurance other than that? A. My impression is 
it is $20,000. 


298 


Q. How much have you ? A. I have $30,000 in policies, and a 
small survivorship annuity. 

Q. How much has the secretary ? A. I don’t know. 

Q. And the actuary ? A. I don’t know; I have forgotten. 

Q. Let me ask you whether you have any proxies from any one ? 
A. Yes, sir. 

Q. To what extent? A. I don’t know, sir. 

Q. Have you no idea? A. Ho, sir. 

Q. You don’t know whether you have one or a hundred thousand ? 
A. "Well, if you won’t accuse me of being facetious again, permit 
me to say we give them the name of the children of Israel; because 
the children of Israel were never supposed to he numbered, and we 
never counted them, and don’t mean to. 

Q. Why not? A. Because so long as I have any thing to say 
about it, no one shall know the number of proxies. 

Q. And have you no idea of the number you have ? A. Oh, a 
good many thousand, I suppose. 

Q. That you hold yourself ? A. Yes; I suppose so. 

Q. Are the proxies made to one of the officers of the company or 
to several? A. In what manner do you mean ? 

Q. Are they usually made to several of the officers, authorizing 
them to cast the votes ? A. They are generally made to Mr. Win¬ 
ston and myself, or to either of us. 

Q. Have you any idea how many you hold? Ho; except several 
thousand. 

Q. Well, several may mean two or one hundred; how many thou¬ 
sand do you hold ? A. I have not looked at them for years ; there 
has been no proxies voted for six or seven years, because there was 
no necessity. 

Q. They are there, and if you want them you have them ? A. 
Yes. 

Q. I want to get at the number that you and Mr. Winston hold? 
A. I have no objection to telling you, if I knew; I have no objec¬ 
tion of telling you how they come; they come along in driblets, 
from year to year, and are pitched into a box and never looked at. 

Q. That is one of the evils complained of, namely : that, in case 
there should be a difficulty in the company, or an attempt to unseat 
any of the officers, you have the tools to keep yourselves there—that 
is why I want to get at the number of proxies you hold? A. We 
have the tools to prevent a small body who live in Hew York upset¬ 
ting all those who don’t live there. 

Q. Suppose a great number outside wanted to unseat you, you 
would have the tools in your hands to keep yourselves there? A. 
They would sweep us out of existence in a few weeks’ time; if there 
was a general dissatisfaction outside, no power on earth could stop 
it; a few years ago we had trouble, and they called policyholders’ 
meetings in Boston and Baltimore; appointed committees to come 
on here; gave them proxies and they came on, and, as soon as they 
learned the true state of affairs, they turned around and voted for 
the officers. 

Q. That don’t give the answer I want to get; how many you and 


299 


Mr. TV inston hold ? -4* I will swear— I have no doubt—we have 

10,000. 

Q. Have you any doubt you have 20,000 ? A. I think it is about 
10,000 in number. 

Q. Will you swear you have not 50,000 ? A. Oh, yes, I guess 
so. 

Q. Will you swear that? A. Yes, 1 will. 

Q. Will you • swear you have not above 30,000 ? A. I think it is 
safe to do so. 

* 

Q. My question is, will you swear you had not above 30,000 ? A. 
Well, if you had been putting them in a box the way T have for 
years you could not tell. 

Q. Can’t you answer my question ? A. No. 

Q- Ton can’t swear that you have 30,000? A. I have not the 
slightest idea that w r e have 30,000, but I never counted them; and I 
have not taken into account the way they have come in for the last 
few years. 

Q. My question was, whether you would swear you did not have 
at least 30,000 ? A. I think I shall be perfectly safe in swearing 
so. 

Q. How are proxies made to run ; until revoked, or for a certain 
number of years ? A. They are made without limit. 

Q. And so run until revoked ? A. There is no limitation as to 
time. 

Q. How many have been received by you, approximately, say 
within the last two years? A. Not many. 

Q. Do many of the persons who obtain loans from the company 
also take insurance? A. T don’t know 7 any thing about that; w r e 
never mix up the two. 

Q. Don’t you know 7 any thing about it ? A. I know wdiat you 
w 7 ant to get at; you w r ant to know whether w r e make it a condition 
with parties obtaining a loan that they shall insure; we don’t. 

By Mr. TVeiant : 

Q. How t are the proxies procured ? A. The manner in which they 
are procured is this: I supposed when a policyholder comes to pay 
his premium, the agent asks him if he has ever given a proxy; and 
if he says he has not, then the agent asks him if he has any objection 
to do it, and the probability is he says no ; most of the proxies are 
given by married women, as the policies are held by the women ; 
and he tells them, if you have no objection, I will have our young 
man, wdio is a notary, call around and get her to sign a proxy; he 
says all right; it w r as done, and comes right along. 

Q. Is it done at the request of yourself, or any other officer? A. 
Undoubtedly; we should be very culpable, if we allowed all the 
business of the Mutual Life to be upturned by a hundred people in 
New York, at any time; that w r ould not be taking care of the inter¬ 
ests of the policyholders. 

Q. TYhat amount of insurance entitles a policyholder to vote ? A. 
One thousand dollars. 


I 


300 


Q. Has he a vote for every $1,000 ? A. Ho ; he votes once as a 
policyholder, but to qualify him to vote, we must have $1,000 
insurance. 

Q. If he has $10,000; does he have more than one vote ? A. Ho 
more. 

Q. Between what dates have these proxies been executed which 
you hold, from the farthest back to the latest date ? A. Well, I think 
the last time I had them examined was five or six years ago, and 
there was some very old ones there, among the early policyholders 
• of the company. 

Q. About what age was the oldest? A: Well, the company is 
iibout thirty-four years old, and I think we have some as old as the 
•company; there are of that first class who were insured at the 
foundation of the company very few living; Mr. John Johnson is 
the oldest member of the company alive ; he lives in Hew York, and 
he holds policy number three; I think we hold his proxy, he gave it 
to us and we held it ever since, and he seems very well satisfied for 
us to do it. 

Q. Have you proxies in your possession of persons who have died 
since they were executed? A. Hot unless they have died— 

Q. Have you, is my question, and you can answer that very 
simply ? A. Excuse me, but I will like to answer that in my own 
way ; I presume we have, for the reason that I have not had them 
examined for the last three or four years, but if there was any inten¬ 
tion of using them I should have every proxy examined for the pur¬ 
pose of having them compared with the books and seeing that the 
policyholder is alive; when an examination is made, then every 
policy which has lapsed is examined, and a proxy is sifted out and 
destroyed, the proxies only being retained where the policies are 
.alive and in force. 

Q. What is the last examination you made ? A. Five or six years 
.ago. 

Q. Among those there may be proxies of those whose policies have 
lapsed? A. Oh, yes, they have not been sifted out. 

By Mr. Husted : 

Q. You have not voted any since ? A. Ho ; I have never known 
them to be voted on but once. 

By Mr. Moak : 

Q. When was that ? A. It was when we had a contested election, 
as we called it; it was a small affair; it was in 1871. 

Q. How many proxies were voted on at that time ? A. I voted a 
few myself, but I think there was no occasion to use them ; yet we 
took a bundle of proxies and did vote them. 

Q. About how many were voted? A. I cannot tell you now. 

Q, Ten thousand ? A. Oh, no 10,000. 

Q. You did not vote all you had? A. Hot much. 

Q. You have an item here of assets, interest on mortgage loans, 
;$4,101,773.43; does that include the interest received annually, or 


» 


301 


the interest on mortgage loans whether paid or not ? A. Probably 
only the interest that was paid. 

Q. Whereabouts would the interest that was unpaid appear in 
your assets ; in what item ? A. It should appear, sir, in the item r 
interest due and accrued on bonds and mortgages. 

Q. How much was that ? A. It was $378,860.41. 

Q. In addition to that amount ? A. Yes, sir. 

Q. Now, in the $378,860.41, would that include the interest upon, 
mortgages given upon real estate where the mortgage has been fore¬ 
closed, and the real estate purchased by the company ? A. No, it 
would not. 

Q. This $4,101,773.43 was interest in fact paid by the mortgages 
and p lid to the company ? A. Yes. 

Q. And do the two items include the interest on all bonds and 
mortgages held by the company? A. Yes, sir. 

Q. Is there any thing to show in this return made by your com¬ 
pany how much real estate your company holds outside of your home 
office, or is it all put in together ? A. In this statement it would 
appear under real estate, unincumbered ; that would be the item. 

Q. That would include the home office ? A. Yes, sir. 

Q. I see here an item, interest on bonds and dividends on stocks r 
$594,000 and over; that would be what was actually received by 
your company ? A. Yes; sir. 

Q. And the interest on other debts due your company, amounting 
to $82,869.12; what debts are those ? A Well, I don’t myself 
know as to any debts there are due the company other than I have 
stated. 

Q. You have no premium notes? A. No, sir. 

Q. Well, there is an item here for $82,869.12 for interest on other 
debts due the company ? A. If you will pass that over, I will step 
over to the department and tell you ; they can tell me in a few 
moments what it is. 

Q. You have money on deposit? A- Yes, sir. 

Q. To what extent ( A. At the present time we have about 
$1,600,000. 

Q. Where is it deposited? A. In banks and trust companies. 

Q- To what extent, how divided up? A. At the present time we 
have in the Merchants’ Exchange bank, I think, about $140,000 ; 
and we have in the American Exchange bank something about 
$200,000 and upwards; we have in the United States Trust com¬ 
pany upwards of $200,000; in the Central Trust company, just 
$200,000 even money; in the Farmers’ Loan and Trust company 
we have about $200,000 ; well, the trust companies have got about 
$200,000 each ; and the Fifth Avenue bank has got $125,000, I 
think. 

Q Are you, or any of your officers, directors or stockholders in 
any of those banks or trust companies ? A. Mr. Coe, die president 
of the American Exchange bank, is one of our board of trustees: 
yes, sir. 

Q. Any other ? A. There is nobody in the Merchants Exchange,- 
and nobody in the trust companies; I think our Mr. Sherwood, one 


302 


of the trustees, holds the nominal title of vice-president of the Fifth 
Avenue bank. 

Q. Is Mr. Winston or yourself a director or stockholder in either 
of the banks or trust companies? A. No, sir, none of them. 

Q. Or either of the officers ? A. No, sir. 

Q. Have loans been made to any of your trustees ? A. In what 
way ? 

Q. In any way? A. Yes, sir, on bond and mortgage. 

Q. To whom ? A. Well, I don’t recall exactly all of them ; I can 
give you the names of some of them; Mr. H. H. McCurdy, my 
father, has borrowed some money on bond and mortgage. 

Q. To what extent ? A. I think $30,000 or $40,000, on property 
worth three or four times that amount. 

Q. Where is the property situated ? A. In Brooklyn. 

Q. What interest does he pay ? A. Seven per cent interest. 

Q. Any other of the trustees? A. Well, I think very likely, sir; 
we should lend any one of the trustees who came to us and presented 
a piece of property. 

Q. I don’t ask you what you should do; my question is what you 
have done? A. Well, we have done it. 

Q. Who else of the trustees have the company loaned money to ? 
A. I cannot recall any specific names just now. 

Q. Well, how many of the north-western States does Mr. Merrill, 
the president’s son-in-law hold the contract as general agent ? A. 
He does not hold any contract. 

Q. Well, agency? A. Michigan, Indiana, Illinois, Wisconsin, 
Iowa, and Minnesota. 

Q. Has he held all those States for the last fifteen or twenty years ? 
A. I think more than that. 

Q. How many other States has he held in addition to those? A. 
None at all. 

Q. How many sons has the president of the company ? A. He 
has two living. 

Q. Two only ? A. Yes, sir. 

Q. Is one of them a medical examiner of the company? A. Yes, 
sir. 

Q. What is his name ? A. Gustavus S. Winston. 

Q. What is his salary, or does he draw a compensation upon the 
number of examinations he makes ? A. His salary is $9,600. 

Q. Does he receive any thing in addition to that for making ex¬ 
aminations ? A. No, sir. 

Q. Does he receive any thing from any other source ? A. No, sir. 

Q. What is the other son’s name ? A. James C. Winston. 

Q. What position does he hold? A. He is a clerk in the office. 

Q. What is his salary ? A. Two thousand five hundred dollars, 

I think. 

Q. How long has this son who is a medical examiner been con¬ 
nected with the company ? A. ISeven or eight years. 

Q. Has his salary been the same all the while ? A. No, sir, it has 
been gradually advanced. 

Q. How long has his salary been $9,600 ? A. Three or four years. 


303 


Q. Well, how much was it before that? A. I don’t think it was 
ever less than $6,000 to start with. 

Q. Iiow long has James C. Winston been connected with the 
company ? A I guess lie has been connected with the company 
possibly fifteen and possibly twelve years. 

Q. His salary, you say, is about $2,500, you think ? A. Yes. 

Q. Not to exceed that ? A. I don’t think it does ; $2,500 or 
$2,600. 

Q How long has his salary been that sum? A. It has been that 
sum for four or five years. 

By Mr. Wei ant: 

Q. What clerkship does he fill? A. In the corresponding 
department. 

Q Does he spend all his time there ? A. Every hour of it. 

Q. Does he receive directly or indirectly any pay by way of com¬ 
mission or bonus ? A. Not at all. 

By Mr. Moak : 

Q. You said about $12,000, you thought, had been paid on the 
policies to the representatives of the son who died; you say he held 
the position of cashier ? A. Yes, sir. 

Q What was his salary ? A. Not over $3,000. 

Q. How long had he held the position ? A. Several years; I 
think he had been connected with the company, at the time of his 
death, ten years. 

Q. Was his estate paid any thing except the regular salary he 
would have received and this $12,000 or so, of policies that were re¬ 
stored ? A. How do you mean. 

Q. AYas his estate paid by the company, or from the assets of the 
company, directly or indirectly, any thing except what was paid for 
these restored policies ? A. I think not; no, sir. 

Q. Well, now, did you have a trustee any time by the name of 
Judge Bradford? A. Yes, sir. 

Q. Did he, at the time of his death, have a lapsed policy in the 
company ? A. AYell, hardly such. 

Q. What do you mean by hardly ? Had he not a policy in the 
company upon which he had not paid the premium when it was due ? 
A. In a certain sense, yes. 

Q. What do you mean by a certain sense; you know whether he 
had paid or not ? A. I would like to tell you the whole story; it 
was a domestic matter. 

Q. AYas not the policy restored after his death? A. It was not 
restore after his death, no, sir ; but during his life-time. 

Q. How long before his death ? A. Several months, and, in fact, 
it never was lapsed. 

Q. Who was the former general agent for New York city, for 
your company? A. Mr. John Albro Little. 

Q. AYas he related to you in any way ? A. Yes, sir. 

Q. How ? A. He was my brother-in-law. 


304 


Q. When did he become the general agent for the company, for 
New York? A. I think about seven years ago. 

Q. How long did he continue general agent? A. About five 
years. 

Q. About what was his annual income from the agency ? A. I 
have understood it was about $10,000 or $12,000 a year. 

Q. Not to exceed that? No, sir; at least that is what I have un¬ 
derstood in a general way. 

Q. Had he been in any way connected with the company before 
he was appointed general agent? A. No, sir, he had not. 

Q. Down to what time did he continue to be general agent? A, 
Dowm to three or four years ago, when he made a partnership with 
Mr. Raymond ; he resigned about two years ago. 

Q. You say he made a partnership? A. I mean he was the real 
general agent, and afterwards he made a partnership. 

Q. Is the firm of which he is a member now the general agent ? 
A. No, sir. 

Q. Who is now the general agent? A. C. H. Raymond. 

Q. Is he related to you in any way ? A. No, sir. 

Q. How long has he been the general agent ? A. About a year 
and a-half, or two years. 

Q. About what is Ins salary ? H. He does not get any salary ; he 
gets a commission. 

Q. Well, what is his income, as reported? A. I should think 
probably in the neighborhood of what I had said his predecessor re¬ 
ceived ; it depends upon his own exertions—upon the amount of 
business he gets in. 

Q. Has your company a restaurant connected with its establish¬ 
ment ? A. It furnishes its officers and clerks a luncheon in its office ; 
in that sense it has, but it does not cook any victuals. 

Q. About what is the annual expense of that ? A. 1 can't tell 
you exactly. I should think probably about $6,000 a year. 

Q. Not to exceed that? A. Well, in round numbers, about that. 

Q. Are there not occasionally dinners given there where wine and 
those kind of things are furnished ? A. Not at present. 

Q. Have there been ? A. We have reformed all that; there have 
been. 

Q. Down to what time? A. Down to a year ago. 

Q. Were there any years when those dinners and luncheons cost tO' 
exceed $10,000 a year ? A. Well, I have not gone over that account, 
sir. 

Q. Well, approximately ? A. You see there is a luncheon furnish¬ 
ed every day in the office to the officers and all the clerks, 115 of 
them, and then once a month during nine months in a year the board 
of trustees have a meeting at the office, and there has been a colla¬ 
tion such as is customary to provide for them. 

Q. Down to a year or so past; down to the time when the wine 
was stopped, had not the annual expense of these luncheons and 
dinners given exceeded $10,000 a year ? A. I cannot say. 

Q. You cannot say? A. No; I cannot say about that. 

Q. How many policies lapsed the last year of your existence; or, 


305 


before you answer that question, I will ask you how much are your 
policies loaded ? A. They are loaded a varying per centage, from 
twenty to forty per cent. 

Q, What would be the average ? A. The average would be one- 
half of that loaded ; from twenty to forty per cent. 

Q. The half of what ? A. W ell, a half would be thirty. 

Q. It would depend upon how many would be loaded at twenty 
and how many at forty? A. Well, that is about the average rate. 

Q. About what is the average rate of the loading ? A. That de¬ 
pends upon the policies, and the number of each issued ; they are 
loaded in different per centages; from twenty to forty per cent. 

Q. About what proportion is loaded forty per cent ? A. I cannot 
tell; mathematics are not my business. 

Q. Is the larger proportion loaded forty per cent ? A. No ; I 
should say the less amount. 

Q. Well, what proportion is loaded forty per cent? A. I cannot 
give you any idea about those things. 

Q. You can’t give us any idea ? A. No, sir. 

Q. You are the vice-president ? A. Yes, sir, 

Q. You cannot tell whether a-half of them are loaded forty per 
cent or not ? A. No, sir. 

Q. Well, not half, is there ? A. No, sir ; it is not my business. 

Q. What is the original amount on life policies of the loading? 
A. I cannot give you the amount of it. 

Q, You have no knowledge on that subject ? A. No, sir. 

Q. And yet you have been vice-president of the company ten or 
twelve years? A. Yes, sir. 

Q. Can you approximate it ? A. I don’t care to approximate it, 
and I cannot. 

Q. Are not to exceed one half ; or is not forty per cent the usual 
loading of a life policy ? A. No, sir, 1 think it is less than that. 

Q. Well, how much less? A. Nearer twenty per cent than forty. 

Q. How much nearer ? A. I told you I cannot give you the ordi¬ 
nary rate. 

Q. You don’t mean to say you can’t give the ordinary rate of 
loading a life policy ? A. 1 mean to say these things are presented 
and determined upon once in five years, at a conference with the 
actuary and the executive officers. 

Q. You are one of the executive officers are you not ? A. Yes, 
sir. 

Q. And, consequently, once in five years you know what it is ? 
A. Y es. 

Q. And you can’t remember what it is when it occurs once in five 
years? A. I cannot remember at the present time; access to all 
these things can be obtained by an examination of the books, and if 
I want to know I can get it. 

Q. That effects the whole ordinary business of the company, 
doesn’t it ? A. Y r es, sir. 

Q. And their balance sheet ? A. Yes ; but it is done under the 
general rule. 


20 


306 


Q. Yet you say you can’t tell us what the original per centage 
of the loading of a life policy is? A. No, sir. 

Q- Can’t you approximate it ? A. No, sir ; except as I tell you, 
it is between twenty and forty per cent. 

Q. How many policies did you issue in 1876—I mean new poli¬ 
cies, as distinguished from those that were revived or restored ? A. 
The number of new policies issued during the year was 6,823. 

Q. How much was the aggregate premium paid upon those ? A. 
I don’t see the sum stated here; the amount of insurance was 
$189,000,000. 

Q. I want to get how much the aggregate premium was ? A. 
Well, that does not seem to be stated. 

Q. Well, how much would the aggregate of all the premiums 
received, and about what would these policies average in premiums; 
.approximate it ? A Do you mean the amount of insurance, or the 
amount paid ? 

Q. The amount of premium paid ? A. I cannot tell it. 

Q. Does the cash received for premiums include the amount paid 
on old premiums and new ones? A. Yes, sir, it does. 

Q. Doesn’t your company return, in any way, to the Insurance 
Department, the amount received for premiums on new policies? 
A. Well, here is the report if it shows it ; we fill up whatever the 
department calls for; we have it on our books, and I can get it from 
that. 

Q. You mean you cannot give it here ? A. No, I don’t think I 
can; no, sir ; I would have had the statement prepared for our own 
board here to-day, if I had known it; that contains the amount 
received for premiums on new policies as well as renewals. 

Q. How many policies were restored last year ? A. One thousand 
two hundred and twenty-four; insuring $3,803,000. 

Q. How much was the premium on those ? A. 1 can’t tell you ; T 
have not got the figures. 

Q. How many policies were surrendered that you paid surrender 
values for ? A. Four thousand five hundred and seventeen. 

Q. Can you tell us how much the reserve upon those surrender 
policies was ? A. I can’t tell you that, sir ; I will furnish it to you ; 
I can tell you what we paid for them; that was $6,000,000. 

Q. You paid for them, how much ? A. The exact amount was 
$6,319,785,21. 

Q. About what proportion of the reserve do you usually pay; you 
have some rule about it, I presuthe ? A. Yes; the rule in our com¬ 
pany is not based upon the proportion of the reserve as was formerly 
the case; the old rule used to be to pay one-half of the reserve, and 
the cash value of the dividends. 

Q. About what proportion of the reserve does your company pay 
under this new rule ? A. I don’t know what proportion of the 
reserve, because I don’t know it has ever been tested on the average 
that way. 

Q. Would it exceed sixty per cent of the reserve? A. I cannot 
say any thing about it, because it differs in different policies, and by 
the present rule a policy is estimated at the time the premium is 


307 


paid, as I understand it, and from the present value of a paid-up 
policy which the company could issue in lieu of the old one, is 
deducted, the contribution of the existing policy to the death claims 
of the company, and half of the difference is given to the policy¬ 
holders. 

Q. About what proportion of the reserve does that average ? A. 
I cannot tell you ; l never tested it. 

Q. Does it average to exceed fifty or sixty per cent ? A. I never 
tested it. 

Q. Would you say it would ? A. It might. 

Q. Would you say it would? A I think it has never been oper¬ 
ated that way. 

Q. You have got some idea; whether it would be a making or 
losing operation ? A. It ought to be a making operation to the com- 
pany. 

Q. Don’t you know about what per centage it is of the reserve ? 
A. No, I cannot tell very well. 

Q. And so you don’t know ? A. I know we keep sufficient to pro¬ 
tect the company from loss. 


By Mr. Wei ant: 

Q. What per cent is the largest you can pay ? A. It is not based 
upon per centage. 

By Mr. Moak : 

Q. Has your company]any different principle from any other com¬ 
pany? A. Yes, sir. 

Q. Is there any other company that has its surrender values on the 
same principle yours does ? A. I don’t think there is. 

Q. How much computation does it take to get at the surrender 
value? A. Well, when the rule is laid down by the actuary, the 
clerks figure it up very readily. 

Q. Is the rule upon which you pay, uniform ? A. Yes, sir. 

Q. Who computes the value ? A. It is done in the actuary’s 
department. 

Q. Give us the rule^ A. I don’t pretend to know any thing 
about it. 

Q. You can’t give it so anyone can understand it ? A. Well, 
here is the theory of the thing. 

Q. Can you give us the rule upon which you pay surrender values 
so that ordinary individuals can understand it ? A. I think I can, 
sir. 

Q. Suppose you do it ? A. To find the amount of paid-up poli¬ 
cies which can properly be given for a contract to be surrendered, 
the reserve serves two purposes: first, to pay the sum insured at the 
death of the policy, and second, to pay its share to the death of 
others who might desire a paid-up policy; the former belongs to the 
company, the latter works for the policy only; the company must 
retain the second item if the first is insufficient; while the former 
works for the benefit of the particular policy only, we deduct half; 


308 


it is a fact of which there is no question that the withdrawal by sur¬ 
render of members of a life insurance company works an impair¬ 
ment to its vitality. 

Q. Because the better lives are supposed to withdraw, I suppose ? 
A. The better lives are disposed to withdraw, there is no doubt of it y 
and in the course of a few years if there was no accession of new 
members, the vitality of the company would become impaired. 

Q. Have you given the rule? A. Yes, sir. 

Q. Is that the rule by which you compute the surrender value ? 
A. Yes, sir; and then we deduct half. 

Q. Why do you deduct half; half of what ? A. Half of the 
amount left after deducting from the reserve the portion required to- 
pay the assumed contributions to the death claims of the company 
which that policy owes the company; we take aw r ay half, because we 
say the company must be protected against all exigencies, and it is 
well known that the vitality of a life company becomes impaired by 
the withdrawal of its life members ? the good lives withdraw, while 
the impaired ones hold on ; that is the case at the present time. 

Q. Have you any means of determining the difference between 
what you paid for surrender values of the policies in 1876, and the 
reserve which those policies represent ? A. As ] say, it is from the 
reserves on these policies as— 

Q • Please answer the question—yes or no? A. Yes, of course we 
have. 

Q. Have you ascertained that amount? A. No, sir, we have not. 

Q. Would the amount about equal fifty per cent of the reserve 
which those policies represent ? A. I have no doubt it would. 

Q. Would it exceed that ? A. I have no doubt it would. 

Q. How much ? A. I could not tell you. 

Q. Would it exceed sixty per cent? A. I can’t tell you ; this is 
all guess work. 

Q. You have a general idea, and I don’t want it exactly? A. If 
you will allow me I will give it to you exactly. 

Q. I want to approximate it for the purposes of this examination ? 
A. Well I suppose it approximates more than fifty per cent; I can¬ 
not come any nearer than that. 

Q. How many policies were lapsed or forfeited from non-payment 
of premiums that were not restored during 1876 ? A. One thousand 
seven hundred and sixty. 

By Mr. Weiant : 

Q. What rate can you afford to pay of the reserve, and yet hold 
the company safe ? A. That is what we can afford to give under 
the rule I have given you. 

Q. Do you make a profit at tha ? A. We propose to. 

Q. You do? A. Yes, sir; we do. 

Q. What is the highest rate you can afford to pay on the surren¬ 
der of a policy so as to make it safe for the company ? A. It depends 
upon the contract in all cases; the premium paid; the age he was 
when insured, and the number of years the policies run on the book, 
and all that sort of thing. 


309 


Q. You can give us about what per centage? A. I don’t think 
it is possible to get at it that way. 

Q. These are matters of computation? A. Yes, but we don’t 
make it with reference to that one average at all; each particular 
case depends upon a particular policy, and it is determined by 
mathematical rules which have been adopted. 

By Mr. Moak : 

Q. Representing how much reserve ? A. That I cannot tell. 

Q. Can’t you approximate about how much the reserve would 
.average on these ? A. No, because, you see, it depends upon the 
number of years the policy runs ; I suppose on the average—well, 
.sir, on the actuarial questions I am not posted; I suppose on the 
average, the reserve is about thirty per cent on the premiums. 

Q. The average reserve is about thirty per cent of the premiums ? 
A. I should suppose so. 

Q. Can’t you tell about how much the 1,700 policies would repre 
sent in reserve ? A. No, I cannot. 

Q. That is the number that lapsed and were not restored ? A. 
Yes, sir. 

Q. And for which paid-up policies were not given? A. Yes, sir. 

Q. How many new policies were taken during the same time? 
A. Nine thousand three hundred and forty-four. 

Q. Are those new ones, do you mean ? A. Yes, sir; and that new 
risk of 9,314 includes the restored policies which are in fact new 
•ones. 

Q. How many of the policies were restored ? A. The new policies 
were 6.823. 

Q. How was the balance of those 9,000 made up? A. One thou¬ 
sand two hundred and twenty-four were restored , and 911 that were 
issued and canceled. 

Q. What do you mean by issued and canceled? A. I mean they 
were not taken by the persons to whom they were issued. 

Q. Did you give any paid-up policies during the year? A. Yes, 
sir. 

Q. How many ? A. I think that will be shown in the report, old 
policies revived during the year. 

Q. You don’t call those paid-up policies? A. No, restored; I 
don’t see that the amount of them is given in the report. 

Q. You cannot give the number? A The number of paid-up 
policies ? 

Q. Yes, sir, the number of paid-up policies issued? A. No. 

Q. Can you give the amount of reserve these paid-up policies rep¬ 
resent? A. No, sir, I cannot. 

Q. I wish you would give us the number of paid-up policies, and 
the reserve, and also the amount of each that were issued ? A. I 
will; you see you went over that with the professor here the other 
day, and I supposed all these questions were up y if I had any idea 
you were going over that subject I would have gone to the books 
.and familiarized myself with many things I have not down now. 




310 


Q. Was there not quite an active fight at one time between the 
Mutual and a man by the name of Stephen English, of whom you 
may have heard ? A. Oh. yes. 

Q. About how long did that continue ? A. I think it continued 
for about a year or more. 

Q. He was publishing certain facts, or what he claimed were facts T 
in regard to the Mutual Life, was he not ? A. Yes, what he claimed 
were facts. 

Q. And he was arrested at the suit of the Mutual for libel, was he 
not ? A. I believe so. 

Q. And held to bail for $30,000? A. Yes, sir. 

Q. And kept in jail for about how long for want of bail ? A. 
Well, for several weeks , perhaps a month or two. 

Q. Several months, was it not ? A. It may have been. 

Q. How many suits did the Mutual have against him on which he 
was held to bail ? A. I really don’t recollect. 

Q. Several, was it not ? A. I think it was more than one. 

Q. The aggregate amount of bail exceeded $60,000 or $70,000 
that was required of * him, did it not ? A. That I don’t know. 

Q. There was $30,000 in one single case, was there not ? A. 
That I do not recollect; I think there was $30,000 in one case; if 
you have the facts whereby I can refresh my memory I wish you 
would let me have them. 

Q. Well, I have not all the facts here, but I was told there was 
$30,000 in one case, and the aggregate was the sum of $60,000 or 
$70,000; do you remember any thing about that? A. Well, I 
think that was so. 

Q. In consequence of his inability to furnish that he was kept in 
jail several months, was he not? A He was kept in jail under the 
order of the court, whatever that was. 

Q. For several months, was it not? A. Yes, I think it was. 

Q. At the same time there was a pretty active unpleasantness 
going on between the Equitable and the Mutual, was there not ? A. 
Yes, sir. 

Q. Each was publishing what it considered to be damaging state¬ 
ments both to the one and to the other, were they not? A. I sup¬ 
pose so. 

Q. And the whole thing was finally compromised, was it not % 
A. I think it was. 

Q. What was the compromise so far as English was concerned ? 
A. Why, he was let out of jail. 

Q. He was paid $30,000 by some one, was he not ? A. Not to- 
my knowledge. 

Q. Was it not agreed that he was to receive $30,000 in $10,000 
installments ; $10,000 the first year, $10,000 the second, and $10,000 
the third ? A. This is the first I ever heard of it in my life. 

Q. You know the Chamber of Life Insurance? A. Yes, sir. 

Q. Was that formed about the time of the compromise between 
the Equitable and the Mutual ? A. No, sir, it was formed some 
time before. 

Q. Was the Equitable and Mutual both members at the same time 


311 


of the Chamber of Life Insurance ? A. They have been from that 
time down. 

Q. Were they at that time? A. No, the Mutual was not a 
member. 

Q. The Equitable was ? A. Yes. 

Q. At that formation was there not a fund formed that went into 
the Chamber of Life Insurance from which English was to be paid 
$30,000 ? A. No, sir, I never heard of such a thing; I never heard 
it discussed. 

Q. How much does your company pay into the Chamber of Life 
Insurance per annum ? A. We paid last year about $12,000; I 
think it is as good an investment as we can make. 

Q. For how many years has it been a member of the Chamber of 
Life Insurance ? A. I think for about three years. 

Q. IIow much did it pay the first year? A. It would probably 
be less than that. 

Q. How much less ? A. It would not be that for the ordinary 
expenses of the chamber; I do not think the ordinary expenses 
would be $5,000 or $6,000. 

Q. Five or six thousand dollars the first year ? A. I don’t think 
it would be more than that. 

Q. How much the second year ? A. It would probably run up; 
I suppose $12,000 last year is more than any previous year; if you 
want to get at the fact whether the Mutual contributed to the Cham¬ 
ber of Life Insurance for the purpose of paying any thing, I tell 
you it is not so. 

Q. I want to know whether it could be done ? A. It could not 
be done, and has not been done. 

Q. How much did you pay the second year? A. I should say the 
same; I told you in round numbers about $12,000 last year, and as 
the business of the chamber has grown, the assessment has grown 
also. 

Q. That don’t give us about how much you paid the second year? 
A. I have not looked into the facts, but I have no doubt it was less 
than last year 

Q. Well, how much less? A. Well, I can’t tell; how can I tell 
that ? 

Q. You can tell us within $100,000? A. Yes, because we didnot 
pay $100,000. 

Q. Well, suppose you do so ? A. I should say, from general recol¬ 
lection, that we paid them $12,000 last year, and that was more than 
any year we have paid since we have been a member; if we paid 
them $12,000 last year and we paid them $10,000 the year before, it 
is about as much as we did. 

Q. Is that your recollection that you paid them $10,000 the year 
before ? A. I have no recollection about it, but that is as near as I 
can give it; we can give it to you. 

Q. What is the object of it ? A. The Chamber of Life Insurance 
is formed for the same object which every trade finds it necessary, 
as it extends and grows, to organize some association where its mem¬ 
bers can meet together for the comparison of their views, reports on 


/ 



312 


the results of their business, the perfection of tlieir methods of 
doing business, and the advantage which is to be gained by personal 
acquaintance. 

Q. How often does it meet ? A. I think the meetings of the 
chamber are quarterly. 

Q. How long since you have attended one of those meetings ? A. 
Once or twice during the year. 

Q. Is one of the objects of that Chamber of Life Insurance to pre¬ 
vent what is called oppressive legislation to insurance companies i A. 
There is no such object in its charter or articles of association. 

Q. Is that one of the objects of the institution? A. One of the 
objects of the Chamber of Life Insurance is to inform and enlighten 
legislatures and legislators on subjects that come before them. 

Q. Is one of the objects of the Chamber of Life Insurance to pre¬ 
vent oppressive legislation in regard to the companies ? A. There 
can’t be any object in preventing that unless it is competent to 
prevent it; the Chamber of Life Insurance undoubtedly does try to 
prevent any thing of that sort. 

Q. As an ex-lawver, can’t you answer that question ? A. If you 
say it is one of the objects of the association, I say it is not. 

Q. You say it is not one of the objects ? A. I say there is no such 
statement anywhere. 

Q. I ask you about what the object of the institution is? A. The 
object is as I have told you. 

Q. Is that one of the objects? A. One of the objects of the insti¬ 
tution is, whenever legislation is proposed in regard to life insurance 
matters, to furnish the proper information and exercise proper influ¬ 
ence in respect to it. 

Q. You have stated that three times already, and you have not 
answered the question fairly ? A. Well, I tried to. 

Q. Well, I will put it again—is one of the objects of the Chamber 
of Life Insurance to prevent oppressive legislation so far as it effects 
insurance companies ? A. I suppose it would endeavor to prevent 
oppressive legislation ; I should suppose so. 

Q. Is that the best answer you can give to the question ? A. I 
don’t know of any other object. 

Q. My question is simply this: whether one of the objects of the 
institution is to prevent oppressive or obnoxious legislation ? A. I 
know of no means of answering it in that manner. 

By Mr. Husted : 

Q. Is there any such object expressed in the articles of association ? 
A. There is no such object expressed in its articles of association, or 
of agreements. 

By Mr. W eiant : 

Q. Have you taken part in that Chamber of Life Insurance ? A. 
Yes, sir. 

Q. You are the vice-president, are you not? A. Yes, sir. 

Q. Have you ever been present at any meeting of the officers or 


313 


board when the subject of legislation was taken under discussion ? 
A. 1 es, frequently; I am willing to give all the information that 
it is possible to give you, but when you ask me an abstract question, 
not formulated any where, I cannot answer it. 

Q. As to legislation in this State or out of it ? A. I don’t think 
I have ever been present when legislation in this State was discussed ; 
I have been present when legislation in other States was discussed, 
the terms of laws proposed, etc., but I do not think there has been 
action taken in regard to discussing legislation in this State. 

Q. Has this Chamber of Life Insurance, to your knowledge or 
information, at any time, employed persons to take charge of this 
branch of its business? A. Yes, sir, I think in some instances. 

Q. Give the names of the persons employed ? A. There was one 
of them a few years ago out in Iowa; there was a case in which the 
statute provided that every life insurance company should furnish its 
report within thirty days or else be subject to a fine of $100 a day 
for every day it failed to file it; that statute had become obsolete, 
-and the larger companies could not comply with it in thirty days 
after the first of January; the Auditor-General of the State under¬ 
stood the matter and permitted them to present their reports within 
a reasonable time; that statute was discovered by some persons, who 
caused a suit to be commenced in the name of the Attorney-General 
for all these penalties ; the chamber sent Mr. Lewis there, and at 
the limited expense of one or two thousand dollars; he retained 
counsel to represent the thing intelligently to the Iowa Legislature, 
and they immediately repealed the act, and caused the suits pending 
to be stopped ; in that case alone the Mutual Life saved $16,000 in 
penalties which it would have been compelled to pay by the statute, 
if it had not succeeded in influencing legislation. 

Q. If you had complied with the law you would not have been 
liable, would you ? A. It was impossible to comply with the law ; 
the law was passed at an early period, before any one understood the 
condition of affairs, and they required us to do what was impossible 
to do; by tacit consent of the Auditor-General we had been per¬ 
mitted to comply within a reasonable time and we had filed our 
reports every year; that is an instance where the chamber has influ¬ 
enced the legislation for good. 

Q. Have you any knowledge, or information, who Mr. Lewis took 
with him, and what funds were expended for counsel ? A. No, sir; 
there never has been one case, to my knowledge, information or 
belief, in which the Chamber of Life Insurance has used one dollar 
to influence legislation in any State for wrong; I would not counte¬ 
nance it if I knew it. 

Q Have any other persons been employed to watch legislation in 
life insurance? A. Yes, sir, in different State capitals there are. 

Q. Who ? A. I am not familiar with the names of the counsel. 

Q, The names of the persons employed I want? A. They'are 
strangers to me, and I have never seen them. 

Q. Can you name any one but Lewis ? A. I do not think I can ; 
w r e never employed any one to watch legislation in New York, 
because we watch it ourselves. 


314 


Q. Outside of the chamber? A. No, we read the morning papers- 
and would get a good idea of what was going on. 

Q. The chamber has never employed attorneys in this State, or 
counsel ? A. No, sir; I do not recollect any case of that sort. 

By Mr. Husted : 

Q. You have regular counsel, have you not? A. Oh, yes; Foster 
& Thomson are the regular counsel. 

By Mr. Moak : 

Q. Are the meetings of the chamber secret ? A. I have never 
known them to be attended by any one but members. 

Q. Is it one of the rules that they shall not be ? A. I don’t know 
there is any rule. 

Q. Have there not been repeated applications on behalf of the 
representatives of the newspapers for admission ? A. Yes, sir. 

Q. Which have been refused ? A. Yes, sir ; certainly. 

Q. Is there any annual statement of the assets and disbursements 
made ? A. There is to the chamber itself. 

Q. By whom ? A. By the secretary and treasurer. 

Q. Are records kept of all its proceedings? A. Yes, sir. 

Q. Are any part of them secret, in the sense that they are not 
recorded? A* No, sir. 

Q. Are those returns of assets and disbursements made annually,, 
or oftener ? A. I think they are made quarterly. 

Q, Is there a committee to whom that is submitted ? A. Yes, sir. 

Q. Are those returns preserved after being passed upon ? A. Yes; 
I presume they are. 

Q. Are they still in existence ? A. I do not know whether they 
are or not. 

Q. Who are the officers of the company for the past year ? A. 
Of the Chamber of Life Insurance ? 

Q. Y es ? A. Mr. Ilewey, of Philadelphia, is the president. 

Q. How t long has he been ? A. The officers have been changed 
every year; the positions are merely nominal—to preside over the 
meetings. 

Q- Who was president before that? A. Colonel Green, of 
Hartford. 

Q. Who was president before that? A. Mr. Batterson, of Hartford. 

Q. How long has Mr. Lewis been secretary ? A. Since it organ¬ 
ized. 

Q. What other officers has it? A. Vice-president, which is merely 
a nominal office ; there are no fees attached to it; then there is the 
treasurer, secretary and counsel. 

Q. Has it committees? A. Yes, sir. 

Q. How many committees has it ? A. It has an executive com¬ 
mittee. 

Q. Consisting of how many members ? A. Five or six. 

Q. Who were they for the past year ? A. I do not recall, now. 

Q. Not any of them ? A. No, they are changed every year. 

Q. I mean for the past year ? A. I would tell you if I knew; I 


315 


can get them and send them to you; there are two principal com¬ 
mittees, the executive and law committees. 

Q. Are you a member of either of them ? A. I think not, except 
as officially, as being vice-president of the chamber, I have the right 
to attend either, aud I have attended those meetings, and they are 
a little mixed up, in my mind, as to which is which. 

Q. When did you attend the last one ? A. Well, it must be two 
or three months ago. 

Q. In the city of New York? A. Yes, sir. 

Q. Was it a meeting of the committee or the chamber ? A. Of 
the committee ; the law committee. 

Q. And you have not attended a meeting of the committee or 
chamber within two or three months ? A. No. 

Q. How long previous to that did you attend any ? A. I do not 
attend the meetings of the chamber very much; I know most of the 
men in the business, generally, and I am not in the habit of attend¬ 
ing the meetings to the chamber itself as much as I wish I could; I 
do not have the time; I think it is a good institution, and most eco¬ 
nomical and beneficial to the insurance companies. 

Q. Was not this settlement between English and your company 
brought about by the intervention of Mr. Hyde, president of the 
Equitable ? A. That is only presumption on my part; I was 
w r aging war on the other side, and I was not a party to the compro¬ 
mise and was very reluctant to have it made. 

Q. Was it not a fact that the war between your company and 
English, and the war between your company and the Equitable, 
ceased at the same time? A. Yes, sir. 

Q. It was all one arrangement? A. Yes, sir. 

Q. And Mr. Hyde was regarded as the backer of English as 
against your company ? A. He was, 

Q. This arrangement or compromise was brought about, as you 
understood it, by Hyde having to quiet English and the whole thing 
stopped ? A. Well, he called off his dog and we called off ours. 

Q. You published pamphlets of what you claimed were fraud& 
and outrages perpetrated by the Equitable? A. Yes, sir; we pub¬ 
lished a good many lively documents at that time. 

Q. How many in all ? A. Oh, I have no idea. 

Q. Well, about how large a number? A. Just as many as I 
could get out—just as many as I could think of. 

Q. For how ffing a time did it extend from the time it com¬ 
menced until it was arranged ? A. It continued from the time the 
fight commenced until it was over. 

Q. Well, I suppose that to be so, but how long was that? A. 
Well, I don’t know; as I suppose this thing was lively while it 
lasted , and when it stopped I don't know exactly. 

Q. Well, was it several months? A. I should say it was ; it was- 
during the summer, and the settlement was made in the fall. 

Q. About what time did it begin ? A. Oh, it had been growing 
in magnitude, and from bad to worse for some time before ; I should 
think during the spring. 


316 


Q. It extended from some time in the spring to some time in the 
fall? A. Yes, sir; I think so. 

By Mr. Weiant : 

Q. When was this? A. It was three or four years ago. 

By Mr. Moak : 

Q. Was there any arrangement made between you and Hyde I 
mean yourself—or a conversation that if Mr. Hyde would control 
English and stop him, you would stop your publications against the 
Equitable? A. Ho, sir ; because Mr. Hyde and I did not speak at 
that time. 

Q. Was it not made between some third person ? A. I do not 
know what there was about it, but it would be a very natural ar¬ 
rangement. 

Q. Did you not make the arrangement? A. Ho, sir; it was 
settled without my knowledge or consent. 

Q. You wanted the fight to go on ? A. I did. 

Q. Who did settle it on your part, Mr. Winston? A. I don’t 
know; it was settled by some one. 

Q. Who it was you don’t know ? A. I do not; I took no part 
in it. 

Q. Did you not understand it to be a fact that English was to be 
paid $30,000 from this Chamber of Life Insurance at the time the 
•compromise was made? A. Ho, sir; I never heard of it. 

Q. You never heard of it? A. Ho, sir; nor don’t believe it 
either. 

Q. You never heard he was to be paid any sum? A. Ho, sir; I 
have heard rumors around on the streets, but I never heard it authen¬ 
ticated, or come from any respectable person. 

Q. Has money been loaned by your company to other directors or 
trustees than you have named? A. Yes, sir; we should loan to any 
trustee on security. 

Q. I mean without security? A. Ho, sir; never a dollar. 

By Mr. H [JSTED I 

Q. Allow me to ask you there , if there was a loan made on the 
collateral of United States bonds? A. Oh, yes, sir; it was an old 
question, and I thought it was asleep; it ought to sleep because it is 
fifteen years ago; that was a question whether it was or was not a 
loan, and it required the services of a good many lawyers to decide 
whether it was a loan, and it never was decided. 

Q. Who was it made to ? A. Seymour L. Husted; it has been 
gone into over and over again; he brought in several United States 
bonds, and, as the president swore, sold them to the company; he 
found he could not use the money he had borrowed on them, forty 
or fifty per cent of the value, and he came and paid the money back 
within a few days, and the interest on the money for the time he 
had it; it was intended at the time to be a purchase, and was a pur¬ 
chase of the bonds, but it didn’t make any special difference which 
it was; there was nothing in it, any way. 


317 


Q. T want you to be clear in your testimony, because that question 
has been raised ? A. I may be permitted to say that there never 
was a dollar loaned to a director or trustee without security of bond 
and mortgage. 


By Mr. Moak : 

Q. What I want to get at is this: have you got a director by the 
name of Stephen D. Babcock? A. Yes, sir. 

Q. What is his business ? A. He is a banker, and president of 
the United States Mortgage Company. 

Q. What is that ? A. It is a company formed by foreign capital¬ 
ists loaning mone}^ on bond and mortgage and investing in western 
lands. 


Q. Is that what is called the United States Mercantile Loan Com¬ 
pany ? A. No, sir. 

Q. You say he is a director, in what trust company? A. In the 
United States Mortgage Company, I said. 

Q. I think you mentioned some trust company ? A. I said he is 
a banker. 

Q. Private banker ? A. Yes, sir. 


Q. Has your company had any deposit with him at any time, any 
money? A. No, sir. 

Q. Never ? A. Never a dollar. 

Q. Has it had on deposit with this United States Mortgage Com¬ 
pany any amount of money ? A. No, sir. 

Q. Not on deposit ? A. Never a dollar. 

Q. Has your company had any transaction with the United States 
Mortgage Company ? A. Never with the Mortgage company. 

Q. Never loaned it any money ? A. No, sir. 

Q. Never purchased any mortgages of it ? A. No, sir. . 

Q. Has Mr. Babcock, individually or as a banker borrowed any 
money ? A. Not unless he did it on mortgage and bond ; I think 
he did some years ago on bond and mortgage. 

Q. How much ? A. I do not recollect; it is some years ago, if 
ever, and I think it is wrong even to state that for it is the baldest 
impression. 

Q. Has your company any mortgage against his real estate ? A. I 
think not; to the best of my knowledge it has not. 

Q. Have you any obligation against him ? A. No. 


By Mr. Husted : 

Who is Mr. Babcock ? A. He is the president of the Chamber of 
Commerce; it is barely possible we may have money on the security 
of a mortgage of his, but if so, it has not received my attention any 
more than 6,000 or 7,000 others. 


By Mr. W eiant : 

Q. Suppose your company declared a dividend to the policyholder 
and he dies before the next premium becomes due, is that premium 
paid ? A. Yes, sir. 


318 


Q. To whom ? A. Paid with the policy. 

Q. In all cases ? A. Yes, sir ; in all cases. 

Q. Did your company, at any time, have a firm by the name of 
Rhodes & Houston, as general agents in Hew York State? A. Mr. 
Rhodes was the general agent and Mr. Houston was his partner. 

Q. Was there some difficulty between your company and that firm? 
A. There was between our company and Rhodes. 

Q. About how much was paid, if any thing was paid them or 
either of them by way of compromise ? A. There was not any com¬ 
promise. 

Q. There was no compromise ? A. Ho, sir. 

Q. Was there any thing paid them? A. Paid them? Rhodes’ 
account was settled with the company. 

Q. How much was his account ? A. I think it was about $13,000. 

Q. What was that account for ? A. Well, it was an account for 
premiums collected that he had not turned over; he paid that to the 
company; then he brought suit against the company afterwards 
which was subsequently dismissed only a short time ago. 

Q. Was any thing paid him on the dismissal ? A. Ho, sir; not a 
dollar. 

Q. Or on account of it ? A. Hot a dollar ; it was not dismissed 
until after he was dead ; he died recently; the suit had been partly 
tried and went over, and after he died it was dismissed. 

Q. Where does Mr. English reside now ? A. I have heard he lives 
in Brooklyn. 

Q. When did you see him last ? A. I have seen him within a 
fortnight. 

Q. Where, in Hew York ? A. Yes, sir, in the office of the Mutual 
Life Insurance Company. 

Q. Was he there on business? A. Yes, sir. 

Q. What is his business now, as you understand it ? A. He is the 
publisher of an insurance newspaper. 

Q. What is the name of it ? A. The Insurance Times. 

Q. Is that published in Hew York ? A. Yes, sir. 

Q. In your return you give your real estate unincumbered value 
at $4,246,245.40 ; how much of that is for your home office ? A. 
One million dollars is the value of the home office. 

Q. Do you own any other real estate, except such as has been pur¬ 
chased in by your company by foreclosure? A Yes, sir. 

Q. Where? A. We own a building in Boston and another in 
Philadelphia. 

Q. What was the cost of the building in Boston ? A. One million 
three hundred and four thousand four hundred and forty-three dol¬ 
lars. 

Q. How much is the net income, exclusive of that portion of the 
building you occupy in Hew York, for the past year? A. Well, for 
a number of years we received our rent free and some six per cent 
income; during the past few years we have gradually taken so much 
of the space in the building for our own use, that it has reduced 
that ratio considerably. 


319 


Q. About how much was your net income from your home build¬ 
ing last year ? A. Well, sir, the rents for the year of the company''s 
property amount to $65,659. 

Q. I am speaking of the rents for the year of that office? A. We 
have not got a statement of the different rents here; I think we 
must get forty odd thousand dollars income from that ; the Safe 
Deposit Company is down stairs. 

Q. What Safe Deposit Company ? A. The Safe Deposit Company 
•of New York ? they paid us $22,000 rent, and the Bank Note Com¬ 
pany pay us $22,0*00 or $23,000 more; we get forty odd thousand 
dollars. 

Q. About how much is the taxes on it ? A. The rate of taxation 
in New York city is at the rate of two or three per cent. 

Q. About how much are the taxes I asked you ? A. We pay upon 
an assessment of $900,000; the taxation is supposed to be on sixty 
per cent of the assumed value. 

Q. Can’t you say how much your taxes are ? A. Well, it will be 
.about $2,500. 

Q. Why did you take off ten per cent on your calculation there ? 
A. Because it is less than three per cent; the rate this year is two 
and eighty eight one-hundredths. 

Q. Is that the amount you are on the assessment book for ? A.We 
are assessed at $900,000. 

Q. Well, take your real estate in Boston ? A. Yes, sir. 

Q. How much does that rent for ? A. It is not finished yet; it 
will be in a few weeks. 

Q. The aggregate expense of that is what ? A. One million three 
hundred and fourteen thousand dollars. 

Q. How large a building is it ? A. It is a building about the size 
of the Mutual Life building in New York. 

Q. You have one in Philadelphia? A. Yes, sir. 

Q. How much was the cost of that ? A. That has cost us 
$1,095,000. 

Q. How long has that been finished? A. That has been finished 
a little over a year. 

Q. How much was received from the rents of portions of that last 
year? A. You see that was completed in the fall of the year, and 
we have rented offices from time to time, and there is a good deal of 
it still unoccupied. 

Q. My question is quite a simple one: how much were the receipts 
from the rent of that during the past year? A. Well, sir, I don’t 
think that would exceed $40,000, besides what we occupied our- 

tSe] VGS 

Q. Would it equal $40,000? A. Yes, sir, I should think it 
would. 

Q. By what tenants ? A. By a-half a dozen; our principal ten¬ 
ants are the Western Union Telegraph Company, they occupy all of 
the basement and all the upper story. 

Q. How much do they pay ? A. Between $15,000 and $20,000. 

Q. The Safe Deposit Company in your building; are you a stock¬ 
holder in that? A. No, sir. 


320 


Q. Mr. Winston ? A. No, sir. 

Q. Has he any thing to do with it in any way ? A. No, sir; 
except to collect the rents of it. 

Q. None of his family are stockholders ? A. No, sir. 

Q. Or any of the trustees? A. No, sir. 

Q. Have you any other real estate except what you have pur- 
chased in the market, and these three parcels you have named ( A. 
Yes, sir. 

Q. What is the value of the real estate you have purchased on 
mortgage ? A. About 800 odd thousand dollars. 

Q. Where is that real estate situated ? A. In the State of New 
Jersey, $287,000 ; in New York city, $214,000 ; Brooklyn, $80,000 
State of New York at large, $237,000. 

Q. Where is the largest portion of that situated, that you call 
State property outside of the city of New York. A. In Brooklyn ; 
I have not gone further with it than that; we have loans in fifty- 
four counties of the State; they are pretty well scattered. 

Q. Was there a loan in the interior of the State, where a consider¬ 
able sum was loaned, and the property sold and realized considerably 
less than the amount of the loan ? A. When do you mean ? 

Q. Within the past two or three years? A. Yes, sir, there was 
one. 

Q. Where was that? A. At Auburn, New York. 

Q. How much was the amount loaned? A. The amount loaned 
was $30,000. 

Q. How much did the property bring on foreclosure? A. I think 
it was bid up to very near the claim of the company; we would not 
let it go for less than the claim, and bought it in. 

Q. Has there been a case where the property was sold, and not 
bought in by the company, at considerably less than the amount 
loaned? A. No, sir. 

Q. Has your company any loan on the Dwight property at Bing¬ 
hamton ? A. On one portion of it. 

Q. How much have you loaned on it, or a portion of it? A. We 
have a loan on the jpark in front of the hotel of seven acres, and 
twenty-two cottages adjoining ; we do not take in the hotel property, 
and my impression is it is $40,000; I cannot tell exactly. 

Q. Your mortgage is $40,000 upon the park and twenty-two tene¬ 
ments? A. Yes, they are cottages. 

Q. Is that all the loan yon have got on any part of it? A. Yes, 
sir. 

Q. Who was your counsel in making that loan? A. Well, do you 
mean the man who examined the title ? 

Q. Yes, first ? A. I presume the title was examined by Lucius 
Robinson. 

Q. Who was the counsel who had charge of making the loan ? A. 
W ell, counsel do not have charge of making the loan ; Mr. Dwight 
came down to the city of New York and applied for it himself, and 
we granted it in New York. 

Q. Was not the title examined by Chapman & Martin? A. Not 
for us; they may have examined it for other people. 


321 


Q. At the time the loan was made? A. No, sir. 

Q. Had they any thing to do with the loan? A. No, sir. 

Q. What became of the mortgage taken on the property ? A. 
What became of it ? 

Q. Yes? A. Why, it is in the company’s vaults. 

Q. Is it not on tile here in the Insurance Department as one of 
the securities there ? A. It may be here , but I don’t think we have 
any mortgage on deposit here\ our deposit is United States bonds- 

Q. Is not that mortgage on file? A. Not at all. 

By Mr. Moody : 

Q. Has the interest been paid on it? A. It has been, to date. 

By Mr. Moak : 

Q. When was the mortgage given? A. I should say three years 
ago. 

Q. Have you any other loan on any other portion of the Dwight 
property? A. No, sir; we have only one loan there; it includes 
the outer buildings, and takes in the ornamental grounds in front of 
about seven acres, running down to the river, and also the twenty- 
two cottages built southerly of the Dwight house. 

Q. On the south side of the street? A. Well, it is all in the 
inclosure ; it don't cover the hotel ; it covers the twenty-two 
small cottages, and the land on which they stand, which is about a 
quarter of an acre each. 

Q. Has not your company a mortgage of the hotel property ? A. 
No, sir. 

Q. Has it never had? A. No, sir, I think not. 


By Mr. Moody : 

Q. Do you know what company has? A. No, sir. 

By Mr. Moak : 

Q. Is that the only mortgage you have on real estate in Bing¬ 
hamton that you know' of? A. We may have others, but if we have 
it is not much. 

Q. Who made the first application for it ? A. Walter Dwight. 

Q. Where? A. At our office in New York. 

Q. That was the first notice you had of a loan being required ? 
A. Yes, sir, I think so. 

Q. What was done about it? A. They made an application and 
filed it in the usual way, and we sent up to get a report. 

Q. To whom ? A. To Orrin Robinson. 

Q. How ? A. By mail. 

Q. What sort of a report did you want from him ? A. A full 
report; I can answer that by giving the instructions to loan agents. 

Q. Did you communicate with Mr. Robinson? A. Yes. 

Q. What was the nature of the report desired from him ? A. As 
to the character of the property, desirability , security, responsibility 
21 


322 


of the bondsmen and so on, and all those points which would in¬ 
fluence a judicious man. 

Q. Did you intrust it to him personally, or have the assistance of 
others ? A. Oh, he always got two appraisers. 

Q. Did he in this instance ? A. Oh, I suppose so. 

Q. Well, you don’t know thatt A. No, I don’t know that, but 
we should not have made the loon unless we had thought so ; I can’t 
say about every one of the loans, but we always require that there 
shall be two local appraisers who shall appraise under oath. 

Q. Do you always see the requirements are complied with? A. 
Yes, sir, so far as we can. 

Q. Do you think they were in this instance ? A. Yes, sir, unless 
we got it some other way. 

Q. If it was appraised the usual way, can you tell the usual 
manner in which it was done? A. The usual manner in which we 
do it is to get the affidavits of two well-known citizens selected by 
Mr. Robinson, and when he reports their names to us for approval 
he would certify who they were and what their characters were. 

Q. Would he report the names of the appraisers before it was 
made ? A. In ordinary cases our appraisers are appointed in a 
town; their names are reported to the committee for approval in 
all cases first, and if it was a single application coming from a place 
where we had not made any loans, the person to whom we referred 
the application for his opinion upon it, we appoint under him two 
persons whom he supposed to be the best judges of the property, 
and he would report their opinions, with his own, to the company 
for the approval of the company, and certify to us who they were; 
if the company were not satisfied with that they would send back 
and get some one else; that would be the ordinary course. 

Q. You don’t know whether they complied with it in this respect ? 
A. I don’t know whether they complied with it or not. 

Q. Do you know whether it was complied with or not ? A. Not 
of my own knowledge, I do not, because I did not see about it my¬ 
self, but we sent up two members of the finance committee to satisfy 
themselves of it. 

Q. Before the loan was made or after? A. Why, before the loan 
was made; the report came down, it was a large loan, and a loan we 
would not ordinarily make. 

Q. How much was the original application for ? A. I cannot tell 
you now. 

Q. Do you know whether the full amount applied for was loaned ? 
A. No, I guess not, I have no idea we did loan what he first applied 
for ; my recollection is that a great deal more was applied for than 
lie got; or in other words, he wanted a great deal more than we felt 
disposed to give. 

Q. Did any one solicit the loan for him ? A. Not that I am 
aware of. 

Q. Did he have any communication with you or any of the 
officers? A. Oh, I recollect seeing Col. Dwight himself there. 

Q. Did any one else communicate with you about it? A. Oh, it 


323 


is a very common tiling, if a man wants a loan, to get his friends to 
write to the company. 

Q. I want to know what was done in this case ? A. I don’t know, 
very likely he did. 

Q. Can't you say whether anybody interested themselves on behalf 
of those parties desiring the loan ? ’ A. Col. Dwight came to see us 
several times about it; we were not very favorably disposed to make 
it, and he brought us letters from persons stating what a desirable 
property it was, and asking our attention to it; so far as I am aware 
ther 3 was no special influence brought to bear. 

Q. Who paid the expenses o± the search ? A. Why, Mr. Dwight. 

Q. The company does not pay the expenses ? A. No, sir. 

Q. Was there any commission paid on the loan ? A. Not by the 
company. 

Q. Does your counsel receive any commissson on the loan ? A. 
No, sir, the by-laws of the company forbid it. 

Q. You have no attorneys at Binghamton? A. No, sir, I think 
not. 

Q. Well, who pays it ? A. Why, the applicant has to pay all the 
expenses. 

Q. Do you know whether the applicant in this case paid Mr. 
Robinson any tiling ? A. I presume they did pay him the usual fee 
for examining the title. 

Q. Do you know how much they paid him ? A. No, sir. 

Q. You have no information? A. We have a by-law that the 
counsel shall not charge for making loans more than they charge in¬ 
dividual clients. 

Q. Do you know whether the by-law was lived up to in this case ? 
A. T do not know, but I believe it was; I believe it to be so. 

Q. Do you make inquiries into it ? A. No ; I have in certain 
cases where parties have made complaints. 

Q. You have had complaints? A. Yes; I have had sometimes. 

Q. Frequently ? A. No, sir? we cannot satisfy every one; I have 
made investigations, but never found any thing unusual or strange 
in the city of New York, prior to the present organization of the 
law department; you must bear in mind that we have a department 
that searches all the titles in New York and Brooklvn free, without 
charge to any one, except for the searches; prior to that there was a 
scale which had been fixed upon by the company years ago, at less 
than the regular bar rate ; I believe the ordinary rate for examining 
titles on bond and mortgage, is one per cent in New York and 
Brooklyn; in consideration of transacting business in behalf of the 
company, counsel were requested to consider whether they could 
not reduce those rates so that it would give us a better chance and 
advantage, as loaners of money, to get our money out; and they did 
so, and fixed a scale of one per cent up to $ 10 , 000 . and, after that, a 
sliding scale ; so the fees of counsel for the Mutual Life are less 
than the ordinary bar rates; that is the way I would test any loan 
in the city or New York. 

Q. Outside of the city of New York, would you consider it an 
infringement of your rules for attorneys to charge any more than the 


324 


actual expenses for making a search ? A. Why, certainly; the}’ 
would have to be paid for their services. 

Q. Well, what expense besides searching the title ? A. Well, I 
supposed you meant the disbursements to the county clerk ; they 
have their labor and a per centage on the loan, according to the cus¬ 
tom of the county. 

Q. Have you any regulation which prescribes the limit of what 
they should consider a reasonable charge ? A. Well, we should say 
if a man was not charged more than the attorney usually charges his 
own clients, the persons have nothing to complain of. 

Q. Well, if they have been in the habit of charging their clients 
five per cent, you would not consider that iniproper ? A. We should 
make inquiry, and if it was the usual and prevailing fee charged by 
lawyers in the neighborhood where this attorney was practicing, and 
lie was charging it in our case, we should make no objection, provid¬ 
ing he did it in all other cases. 

Q. Would you require it in all other cases in order to permit it; 
suppose he charges one client ten and another five ? A. Why, then 
we should make him charge our man fi ve per cent. 

Q. Do you take any particular pains to inquire into it ? A. Not 
miless complaint is made to the office. 

Q. Then complaints must be made in order to bring your attention, 
to it \ A. Excepting the rule that we notify these people. 

Q. Have you had a case where appraisers have been paid more 
than the actual fees for making appraisements ? A. No, sir. 

Q. So as to get a larger loan than the value of the property war¬ 
ranted ? A. N o, sir. 

Q. You never have had complaints of that kind ? A. No, sir. 

Q. There have arisen cases where the buildings and property have 
been valued, by reason of collusion between borrowers and apprais¬ 
ers, at a far higher rate than their value, have there not ? A. That 
is getting down to a rather fine point ; we have had reason to believe 
property has been over-valued, but when you come down to collusion 
that is another matter. 

Q. Have you any suggestion to make as to the general manner of 
appraisement, to prevent a company being deceived ? A. I do not 
think any thing bat honesty and integrity will operate on it. 

Q. What do you think of having an appraiser appointed by the 
department and certified by the county judge ? A. It would not 
amount to any thing ; the company would not take the appraisal of 
a political appointee ; I see that is in the bill ; it would add ten 
dollars more for the men to pay who is to get the loan, although it 
is provided that the company shall pay the appraisal; it has either 
to come from the policyholder or we should require the borrower to 
pay it; we certainly should not be governed by any political 
appointee; if we take a man we pick him out and believe him to be 
honest, and a man in our judgment that we thought we could trust. 

By Mr. Moody : 

Q. Why do you say “ political appointee ? ” A. Because he would 
be a political appointee. 


325 


Q. Well, liow do you know lie would ? A. If you are going to ask 
me the source of my knowledge now, I am not going to answer you. 

Q. Well, you make a charge? A. Yes; any man is a political 
appointee who is appointed by the State; you may change the 
expression if you please ; call him a public appointee; use the word 
public officer if you choose- 

By Mr. Husted : 

Q. You did not mean a partisan appointee ? A. No, I mean a 
public officer; I don’t make any charge about it. 

Q. Has not your company been deceived into making loans by 
their appraisements being higher than they ought to be? A. Yes, 
sir; undoubtedly we have. 

Q. And you loaned more than you would have, had you known 
it ? A. Undoubtedly, we have done that, but we would not have 
done it, if we had known all about it. 

By Mr. Moak : 

Q. Was there a loan made up here, by your company, to George 
Martin ? A. Yes, sir. 

Q. Quite a large loan ? A. Yes, sir. 

Q. How much was it ? A. I have forgotten; I guess it was the 
meanest loan we ever made; it was a loan that was an infernal 
shame to put up on us; there is no doubt about that. 

Q. Do you remember the amount of the loan ? A. I think it was 
$20,000. 

Q. I heard it was $40,000 ? A. I don’t think it was $40,000; 
it was a pretty poor loan, there is no doubt about that; of course, we 
have got considerable in amount on bond and mortgage, but this is 
a small amount, and we shall make money in the end; as we did in 
1856; we had to take a good deal of real estate, and sold it again, 
and when we balanced our books we had a very handsome profit. 

Q. I have been told that Martin paid a very handsome bonus for 
that loan? A. Well, I should think he did to get such a loan as 
that; I do not know who he paid it to, but I do not believe he paid 
it to any of our men ; we are not allowed to sacrifice the property 
we buy under bond and mortgage, but can hold it, under the State 
laws, for five years, and as much longer as the Superintendent of 
the Insurance Department will allow us. 

Q. You have amounts on loans secured on bond and mortgage, 
$60,856,200.18; where is that real estate situated? A. Well, I can 
only judge by the amount of the loan? 

Q. I didn't know but you had the aggregate there? A. I can 
give you the amount of the loans. 

Q. Well, that is what I want? A. There is $11,000,000 in New 
Jersey; $27,000,000 in the city of New York; $3,500,000 in Brook¬ 
lyn; and four loans amounting to $35,000 in Connecticut; one of 
$14,000 in Massachusetts, and $800,000 in Pennsylvania. 

Q. How does your company loan in Pennsylvania—by what 
right ? A. Because the law provides that life insurance companies 


326 


may invest money on bond and mortgage within fifty miles of the 
city of New York and States adjacent thereto; it allows us to extend 
into the States of Massachusetts, Vermont and Connecticut. 

Q. You have how much in Pennsylvania? A. Eight hundred 
thousand dollars. 

Q. What is your rule as to how much of the appraised value you 
loan? A. We intend never to exceed forty per cent of the appraised 
value. 

Q. You report $12,223,103.86 in stocks and bonds ? A. They 
are the stocks and bonds. 


A. U. S. bonds, registered 

New York City bonds 

Boston Water bonds, registered 

Providence, R. I., bonds, registered 

Cherry Yalley Town bonds 

City of Yonkers bonds - 

Buffalo City bonds - 

Elmira City bonds - 

Missouri State bonds 

San Francisco bonds 

Union County, N. J., bonds - 

Plainfield, N. J., bonds - 


Par value. 

Market value 


$7,473,550 

$7,907,340 

00 

2,405,000 

2,412,587 

50 

500,000 

555,250 

00 

500,000 

537,500 

00 

50,000 

50,000 

00 

118,000 

128,250 

00 

140,000 

145,417 

50 

56,000 

57,435 

00 

215,000 

225 025 

00 

590,000 

637,528 

71 

14,000 

14,735 

00 

1,500 

1,500 

00 

$12,003,850 

$12,673,569 

33 


Q. This amount of cash on deposit on the thirty-first of Decem¬ 
ber, $2,183,001.73; was that actually deposited to the credit of the 
company that day ? A. Every dollar of it. 

Q. How much had it been increased in the month ? A. Probably 
it had been considerably decreased. 

Q. Then you had, within the month previous, a considerably 
larger amount on deposit? A. Yes,sir. 

Q. How much was it decreased within the month after the first 
of January ? A. Well, it was decreased somewhat; the fact is— 

Q. To what extent? A. Well, this was the reason of it; we had 
bought $2,500,000 of the new government four and a-lialf per cent, 
and the president being under the impression that gold was going 
down did not want to pay for them until it was absolutely necessary, 
and as it was necessary to take up the bonds we had contracted to 
buy, he paid for them by degrees, and the money in hand on the 
first of December was probably over $3,000,000; it gradually de¬ 
creased until the thirty-first of December and run down along 
through the month of January, as we purchased these bonds and 
paid for them and put them away in our security vault; you want 
to know if we ever made a transfer of balances from one bank to 
the other in order to make a fictitious balance; we never did it in 
the world. 

Q. Has your company a special charter? A. Yes, sir. 









327 


Q* regard to what securities you may take? A. No, sir; we 
come under the general law. 

Q. I do not tind any thing authorizing you to loan in any other 
State ? A. It is here; I will send you an abstract of it; we have 
had it up under discussion a half dozen times as to the meaning of 
the word “ adjacent,’ there are some who hold that it means con¬ 
tiguous. 

Q. Have you ever, in any case, drawn on your agents just previ¬ 
ous to the first of January for sums, and had them credited to you, 
and immediately, or soon after the first of January, have paid those 
drafts yourself at the home office? A. No, sir; not a dollar; on the 
contrary we have always been rather proud of the small amount we 
showed on hand, and report as premiums in the course of collection 
and in the hands of agents; it has always been our practice to drum 
up our agents the iirst of the month and get in all we can ; the agents 
are willing to do it because it helps them in their business, because 
the better balances we can show the more they can advertise it and 
the more it helps the business. 

Q. Have you reinsured any of your risks in any other company ? 
A. Not a dollar. 

Q. Have you ever reinsured the risk of any other company? A. 
Not a dollar. 

Q. I see an item here, claims for the death losses due and unpaid, 
what does that mean ? A. It means that deaths reported to the 
company, and we put it as a liability on the thirty-first of December 
and did not wait for the reports to come in to substantiate the items. 

Q. Well, what does liability on the policyholders'" account mean ? 
A. That means reserve. 

Q. How much was your reserve on the thirty-first of December ? 
A. The net value was $7,031,205. 

Q. Are you or the president or any of the officers connected in 
any way with any other corporation of any kind, either as director 
or stockholder, president, trustee, or otherwise ? A. I do not think 
the president is at all; I am, I believe, unless they have turned me 
out, a director in the New York City Fire Insurance Company, but 
I rarely attend any meetings, because I have not the time. 

Q. How much an amount does your company hold in fire insurance 
in the various insurance companies, as collateral for loans ? A. 
About $35,000,000. 

Q. Wliat is the company in which you insure the largest amount ? 
A. I suppose the Continental and Home have more than any other 
two companies. 

Q. Which is the next largest ? A. I cannot tell you ; the Liver¬ 
pool, London and Globe probably have the most; our rule is not to 
take more insurance than the actual capital and surplus of a fire 
company. 

Q. Not to take what ? A. Not to take more policies than the 
entire capital and surplus. 

Q. Explain what you mean by that? A. If a company has 
$200,000 in capital and $90,000 in surplus, we should not take more 
than $290,0O0, and when we have that amount we stop. 


328 


By Mr. Moody : 

Q. It don’t matter if it is spread over the country ? A. That is 
what we look to; if we take a loan on a block of buildings, and they 
brought us a policy in one company on the whole block and that 
company had a policy on any other of those buildings, we should 
want a company that had not quite so many eggs in that par¬ 
ticular basket; we look at that and the character and stability of the 
company. 

Q. Have you, within the last five years, to your knowledge, re¬ 
ceived directly or indirectly from any person or corporation, or has 
your president, to your knowledge or information, received any sum 
of money, either directly or indirectly for the loan or deposit of the 
bonds or security or assets of the insurance company ? A. Never. 

Q. Neither has there been any profits received by you or any other 
officer of the company for the investments of the funds of the cor¬ 
poration ? A. Not one penny; if there were, and it should be 
known, any such officer would lose his place immediately. 

Q. Your dividends are payable in the reduction of the next pre¬ 
mium? A. Yes, sir. 

Q. Suppose the parties dies before the next premium is payable ? 
A. Yes. 

Q. Do you pay the dividend then ? A. Yes, sir, we pay it with 
the death loss. 

Q. Are your dividends counted in on the premium income ? A. 
Yes, sir, the dividend is counted in on the premium used; that is, 
so much of the dividend is used as is necessary to purchase addi¬ 
tional insurance with, only that much. 

Q. Take at the end of the year, your premium income would be 
the amount received for new policies? A. Yes, sir. 

Q. What else ? A. And the amount which the policyholders had 
raised in the payment of reversionary insurance; that is, instead of 
drawing their dividend in cash they take so much additional insur¬ 
ance ; for instance, you come in and we say, here is your dividend 
for fifty dollars, what will you do with it, will you put it in your 
pocket; you may say no, I will take it in additional insurance ; there 
lias to be an entry in the books, and we get pay for it. 

Q. You would call that an addition to the insurance ? A. Yes, 
simply an addition. 

Q. You would not include that as a new policy ? A. No, sir. 

Q. Do you know any person connected with the office whose duty 
it is to see to the putting of the fire policies, and who is paid any 
thing ? A. No, sir, not to my knowledge; we would not allow it 
for a moment. 

By Mr. W eiant : 

Q, Don’t you suggest to any one ; you say your risks are in one 
hundred and fifty (150) companies ? A. Yes, our risks are in one 
hundred and fifty (150) companies; for those in New York we have 
printed lists containing the names of all the companies in New York ; 
when a man gets a loan and it is partially secured on a dwelling- 
house, he is handed a printed list from which to select. 


329 


Q. Don’t you suggest any particular one ? A. Not unless our 
line in sonde of them is full and we check them olf and say, give us 
Si policy in any one of the others. 

Q. You don’t suggest any particular one? A. No; for instance, 
we simply check off a company where our line is full and say, all 
the rest are free. 

Q. Suppose you have a loss, how is it paid ? A. By check. 

Q. To whom is it made payable ? A. Payable in every case to 
the beneficiary. 

Q. In all cases ? A. In all cases, unless the parties make a written 
request to pay it to any one else’s order; but we have very few of 
them, as we don’t like them. 

Q. Are they sent to the agents for delivery ? A. Yes, sir. 

Q. Why not send directly to the beneficiary ? A. Because in nine 
cases out of ten it is more bother than the thing is worth ; the agents 
know the persons, and can deliver it better than we can send it. 

Q. It is made a source of complaint by some persons, who say 
these checks are sent to the agent, and that he says to the beneficiary, 
“ Now I have done a clever thing by you, and have got you this pol¬ 
icy, and you should make me a present,” and substantially demands 
from them fifty (50) or a hundred (100) dollars for the delivery of the 
check to them ; they don’t say it in so many words, but practically 
say you must; do you know an instance of that kind in your com¬ 
pany ? A. No; it is possible it may be done, but if I heard a 
complaint, and found it to be true, I would remove him in less than 
no time. 

Q. You could avoid it by sending direct to the beneficiary, 
couldn’t you ? A. I might, but I don’t think it has occurred; I 
might avoid it, but then we run a chance more or less; the agent 
knows just the rules of the company, and it gets into the hands of 
the beneficiary at once; whereas if it were left to be sent the other 
way one-half the people would not know enough to write to us, or 
wouldn’t know how to do it to have it paid properly, or would give 
a wrong address, and would not pay attention to it. 

Q. Do you always make them payable to the beneficiary ? A. 
Always, in every case. 

Q. Are the checks ever made payable to the officers of the com¬ 
pany ? A. Never. 

Q. Does your company require its officers to give security for the 
manner in which they perform the duties of their offices. A. 
Yes, sir. 

Q. How much? A. I think the president gives—well, I am not 
sure—I think he gives $40,000 or $50,000; I would not swear 
which; I give $20,000 in bonds, and the other officers give bonds in 
sums from $5,000 up to $20,000. 

By Mr. Wei ant: 

Q. You are an officer of no other bank* or insurance corporation ? 
A. Only in a fire insurance company ; I took some stock in that to 
oblige a friend. 

Q. I would like you to say what officers of your company are 


330 


officers of any other corporation, either as director or trustee, or other 
officer, so far as you know; take Mr. Winston in the first place ? 
A. Well, he is president of this company, and nothing else. 

Q. Any other corporation ? A. Oh, yes, of some religious cor¬ 
poration ; he is trustee of half a dozen churches. 

Q. Have you any loans made to any of the corporations with 
which he is connected ? A. Not for that reason. 

Q. Well, they have no loans, is that it ? A. Well, they have not 
any more than any other; it is barely possible he might be trustee of 
some institution that has got a loan; Mr. Pruyn, all the office he 
holds, that I know of, is Chancellor of the University; I suppose he 
holds a good many offices; Richard H. McCurdy is a director in the 
Continental Fire, and a good many things he has been director of. 

Q. In either of the banks in which you do business ? A. No; 
Mr. Retts is trustee of Calvin College, and he holds the position of 
trustee or director in some otlier institutions, I dare say. 

Q. Is he trustee or director of any other insurance company or 
bank? A. No, sir, I think not; Mr. Cornell and Mr. Sproulls, 1 
don’t know; most people in New York would have their names 
brought in as directors of some little fire company if they had any 
standing. 

Q. Then you come to the Governor ? A. Fie is connected with a 
pretty large corporation, I think. 

Q. State of New York, do you mean? A. Yes, sir. 

Q. No railroad corporations or banks? A. No, I don’t know what 
he is connected with ; I suppose you can get the information if you 
choose to call him here ; then you come to Mr. Babcock ; I told you 
he was president of the United States Mortgage Company, and he 
is trustee in a good many other companies, I suppose. 

Q. What kind of companies ? A. Fire and marine insurance; 
William Smith Brown I don’t know about; next is Henry A. 
Smythe, he was president of the Trust Company, but is so no 
longer. 

Q. What trust company ? A. The New York State Loan and 
Trust Company; then we come to William E. Dodge; I see his 
name in the papers in connection with a good many corporations. 

Q. Fire insurance ? A. I think I saw his name as connected with 
two or three marine companies. 

Q. Connected with any life company ? A. No, sir, next we get 
to Mr. Coe; he is president of the American Exchange hank, and I 
don’t recall any other; the next is Mr. William Vermilyea, I think 
he is a director with the Merchants’ bank; we don’t keep any ac¬ 
count there. 

Q. Is he director in any fire insurance company? A. He may be. 

Q. Is lie connected with any railroad corporation ? A. Not to 
my knowledge; if he is it has had no effect upon our company. 

Q. We found one company which had the president and vice- 
president of the insurance company, and also the president and vice- 
president of a horse railroad company ? A. Yes. I saw that, but 
we have not; the next one is John Develin; I don’t know what he 
is in. 


331 


Q. Is lie a member of the firm employed by your company as 
attorneys? A. Yes, but not very much; the next is Martin Bates, 
he is a director of several fire insurance companies ; the next man is 
Mr. William H. Haines; Mr. Haines is also a director of several fire 
insurance companies; the next one is Mr. Seymour L. Husted, he is 
president of the Dime Savings bank of Brooklyn, but we have no 
money there; the next is Oliver H. Palmer, he is solicitor of the 
company, also a director of the Western Union Telegraph Company; 
then Henry E. Davies, he is a director in the Union Trust Company 
of Hew York : we don’t have any thing to do with them; the next 
is Richard A. McCurdy, and that is myself; the next is Francis 
Skiddy, I have seen his name connected with marine companies. 

Q. Do you know if he is connected with any other insurance 
company, fire or life? A. Ho; then Mr. Herman C. Yon Post, 
I don't know about him; the next is Mr. Richardson, I know 
he is president of a bank in Boston, and also a director; the next 
is Mr. Rice, Alexander II. Rice, he is Governor of Massachusetts; 
the next is William F. Babcock, and I don’t know about him, 
nor about Mr. Ratchford Starr ; Mr. Frederick IT. Cossittis director 
in one or two of those things, I mean fire and marine insurance 
companies. 

Q. In any other life insurance companies? A. Ho, sir; Mr. May 
is the next; I don’t recall any thing; Mr. Harriman I don’t think 
is ; Mr. Dickson is president of the Delaware and Hudson Canal 
Company. 

Q. Do you hold any stock or bonds of that company ? A. Ho; 
Mr. Smith I don’t think is ; Mr. Sherwood is a director in the Wash¬ 
ington Life Insurance Company, and has been for a number of years; 
Mr. Fabrie is a director in a good many fire companies. I think I 
have seen his name in the paper a number of times; Mr. Andrews, 
I don’t know whether he is or not; there was one thing that you 
requested Mr. Lloyd to bring, which has been overlooked, and that 
is a memoranda of claims contested by the companies for the past 
two (2) years ; Judge Palmer writes to me as follows : 


The Mutual Life Insurance Company of Hew York, 

Law Department, 110 to 1J6 Broadway, 

Hew York, March 22, 1877. 

Richard A. McCurdy, Esq-, Vice-P resident Mutual Life Insurance 
Company of Mew York : 

Dear Sir. —You ask me for a memorandum of all claims con¬ 
tested by the company during the past two years. 

I assume you mean claims on policies upon which actions have 
been brought against the company. 

During the year 1875, the company paid on claims by death, 1,064 
policies, amounting to $3,850,000. 


332 


During the same year, 1875, actions were brought against the 
company on the following policies : 


Cases of suicide - 
Terminated before death - 

No proofs of death, but paid when proofs were fur¬ 
nished ------ 

Case of policy on life of married woman; death 
caused by abortion, with advice and consent of 
husband, in which Supreme Court of Massachusetts 
held husband could not recover 
Policy on life of a woman who was killed by her 
pretended husband, claiming to be assignee of the 
policy ------ 


6 $ 21,000 

4 21,000 

1 2,500 

1 1,000 

1 2,500 


13 $48,000 


Of these (3) three, amounting to $15,000, were settled during the 
year, leaving unsettled $33,000. 

During the year 1876 the company paid, on claims by death, 1,026 
policies, amounting to $3,702,427.75. 

During the same year actions were brought against the company 
on the following policies, namely : 


Cases of suicide 
Cases of fraudulent insurauce 
Cases of gross intemperance 
Terminated before death 


- 7 involving $20,000 

- 1 “ 2,000 

- 1 “ 2,500 

- 1 “ 500 


10 $25,000 


Of these two were settled during the year, amounting to $7,500, 
leaving unsettled $17,500. 

The foregoing, I believe, meets your inquiry. 

Yours respectfully, 

O. H. PALMER, 

Solicitor. 


Q. That paper gives the case ? A. Yes, sir. 

Q. Do you know any thing about the cases where the defense was 
fraudulent or the insurance procured by fraud? A. No ; there are 
a good many cases, though ; but those particular ones, I don’t know 
what they are. 

By Mr. Moak : 

Q. How much is the aggregate of the Tontine fund % A I know 
we have quite a little reserve for it, but the policies are so few, and 
we have issued so few for the past few years, 1 have paid no atten¬ 
tion to it. 














333 


Q. \ou don’t keep it separate ? A. Yes ; we do; but you ask me 
a question, and I cannot tell you exactly what it is; I have here now 
the information you asked for about the general agents ; it gives you 
what you asked for, but published in the gross amount, as that is, it 
is very unfair, because it does not indicate how much there may be 
paid to either of them ? you will glean from that statement what 
Mr. Merrill has received 


Detroit 

- 

- 

1875 

- 

$1,411,630 

49 

$103,605 

62 

do 

- 

- 

1876 

- 

1,339,368 

80 

103,417 

90 

Philadelphia 

- 

- 

1875 

- 

1,352,282 

69 

107,200 

29 

do 

- 

• 

1876 

- 

1,246,234 

51 

104,921 

03 

Baltimore 

- 

- 

1875 

- 

829,692 

17 

77,262 

30 

do 

- 

- 

1876 

- 

788,884 

98 

39,323 

96 

Boston 

- 

- 

1875 

- 

683,363 

01 

48,753 

65 

do 

- 

- 

1876 

- 

633,280 

56 

41,586 

48 

Troy 

- 

- 

1875 

- 

800,050 

07 

69,318 

90 

do 

- 

- 

1876 

- 

764,431 

27 

60,605 

45 

San Francisco 

- 

- 

1875 

- 

765,465 

99 

48,714 

65 

do 

- 

- 

1876 

- 

616,000 

69 

38,205 

60 

Cleveland 

- 

- 

1875 

- 

611,092 

56 

49,200 

61 

do 

- 

- 

1876 

- 

574,3< *2 

65 

44,170 

46 

New York city 

- 

- 

1875 

- 

110,128 

76 

69,005 

12 

do 

- 

- 

1876 

- 

96,344 

59 

61,321 

93 

New Haven 

- 

- 

1875 

- 

376,373 

34 

25,675 

26 

do 

- 

- 

1876 

- 

325,798 

54 

21,736 

96 

Yonkers and Rutland 

- 

- 

1875 

- 

253,262 

68 

19,637 

19 

do do 

- 

- 

1876 

- 

232,765 

28 

17,221 

25 

St. Louis 

- 

- 

1875 

- 

307,112 

48 

25,900 

58 

do 

- 

- 

1876 

- 

333,399 

58 

29,764 

40 

Newark - . - 

- 

- 

1875 

- 

273,805 

24 

15,718 

56 

do 

- 

- 

1876 

- 

259,924 

83 

23,333 

53 

Portland 

- 

- 

1875 

- 

143,093 

40 

6,166 

09 

do 

- 

- 

1876 

- 

130,598 

87 

6,304 

52 

Providence - 

- 

- 

1875 

- 

235,683 

26 

22,039 

62 

do 

• 

- 

1876 

- 

201,681 

22 

10,008 

75 


Q. It is pretty certain he receives live (5) or ten (10) per cent on 
it ? A. No, it is not. 

Q. Does this give the amount paid to each agent for 1875 and 
1876 ? A. Yes; our total commission paid last year was only three 
(3) per cent on the premium ; that statement gives the gross com¬ 
mission paid to our agents during the past two years ; we do our busi¬ 
ness different from others. 

Q. This gives the correct amount received by the general agents 
in the aggregate for 1875 and 1876 for the places stated ? A. Yes, 
sir. 

Q. And that covers all that they received without any deductio 
on account of what proportion of it was received by the local agents? 
A* Yes, sir; our commissions average less than four per cent on the 
co lections ; it don’t make a particle of difference what we pay, it is 
the averages that tells in life insurance. 


334 


By Mr. W eiant : 

Q. Look at the list of attorneys employed in the State; do you 
know whether those attorneys have been employed to perform any 
other services than foreclosures of mortgages ? A. Oh, I suppose 
some of them have. 

Q. Which one of them ? A. I think we advise with Develin 
sometimes, and we have advised with Judge Davies; we paid the 
judge last year $1,916, that is included in the $16,000, and those are 
the entire fees, and includes the fees paid to Judge Davies and the 
firm as well, with which he is connected.. 

Q. Did you employ any others except in matters of foreclosures ? 
A. Yes, sir; Mr. Casby, of Newark, was employed to settle some 
assessment for us out in Elizabeth ; there is no one else that I think 
of. 

Q. Any one of the New York attorneys ? A. No, sir; we do it 
all at our own shop. 

Q. You say there are no others employed for any other purpose, 
except for foreclosure of mortgage? A. No, I think not; yes— 
Sewell & Pierce were paid for conducting this very litigation talked 
about, brought by Pose. 

Q. Have you paid them any counsel fees? A. No, sir; Matthews , 
Ilusted and Foley we have not employed for any purpose excep>t for 
the foreclosure of mortgages , and Juive not bad any thing to send 
. to them ; since last year. 

Q. Have neither of those firms received any additional fees ? A. 
No, sir. 

Q. All they have been paid they received on the foreclosure of 
mortgages ? A. Yes, sir. 

Q. Have you other persons you employed for other purposes 
other than foreclosure mortgages in the city of New York? A. No, 
sir. 

Q. Or counsel? A. No, that is contained under the last sum; 
the fact is they get up all kinds of extravagant stories, but very little 
foundation in them. 

Q. In your testimony this morning have you stated all the com¬ 
pensation you have received, or payments received from the com¬ 
pany ? A. Yes, sir, I have, fully ; if I have not and you will ask it 
over again, you can get it as broad as possible, and I will answer it. 

Q. About the year 1870, do you recollect of an additional com¬ 
pensation being given to the officers of the company at that time ? 
A. Only what I have testified to; it was in regard to the last pay¬ 
ment of the old bonus. 

Q. Was there a bonus paid then ? A. Whenever it was, when I 
came in I found it in force, and profited by it one year. 

Q. Where, in the report, is the payment of the bonuses charged ? 
A- At that time ? 

Q. Yes? A. Well, the theory of the actuary we had at that time 
was, that that was a proper chtrge to the dividends to the policy¬ 
holder, because it was part of the earnings of the company and should 
be participated, in by them. 


335 


Q. In wliat part of your accounts did it appear then ? A. It 
appeared at that time as dividends paid, I think; I have such an 
understanding in my mind; at this date I have an impression it 
should not be charged so, but the amount was charged to the divi¬ 
dend and passed to the dividend account. 

Q. It was not dividend as such, was it? A. Well, it was part of 
the dividends earned by the company. 

Q. But not what the officers were entitled to as policyholders ? 
A. I am not defending it, and it stopped right there ; it was a theory 
that prevailed then, but we have learned better since. 

Q. Can you state the aggregate amount that was paid for, say, 
during the past year? A. Oh, no; the fact is I can’t tell you; liovr 
can 1; I don’t believe if I asked you what you got ten years ago out 
of foreclosures, you could tell me within $500, $1,000 or $2,000; 
this is ten years ago, and what other people got I don’t know; you 
ask some question about the Southern policies ; at the outbreak of 
the war we had nearly 300 policies, insuring $1,250,000 ; it is a mis¬ 
take to suppose the Mutual Life had an enormous amount of South¬ 
ern policies; we had been shutting down upon it before. 

Q. How much was the gross reserve on those policies ? A. The 
special reserve for surrender value was $361,416; on April 9, 1867, 
there remained 102 policies, insuring $364,000, the surrender value 
of which was $50,402.80; at that time we did not maintain a sepa¬ 
rate reserve, but paid them as they came up; all the claims which 
have been pr 3 sented have been settled ; there is about 1,000 of them 
amounting to $45,000 insurance, and worth in cash about $5,000, 
which have never been heard of, and perhaps never will be ; I want 
to make a little statement about the commission received by Mr. 
Hvde on his father’s agencies in Boston, and I wish to do so because 
the statement as made might leave an erroneous impression; it is an 
old contract made with Mr. Hyde’s father in his life-time, and which 
Mr. Hyde inherited from him the same as he might any thing else; 
Mr. Hyde is not the agent of the company in fact, and never has 
been, but simply inherited this contract the same as he might any 
other property; it was made at the time, as I told you, when we 
made the old contracts: he is a little in error as to the amount; very 
likely it was, at the time of his father’s death, $20,000 a year, but I 
had the thing looked up and it is less than $13,000 now, that being 
the gross receipts out of which he has to pay his agents. 

The Chairman —That statement was subsequently corrected, and 
he said it was about $12,000. 


336 


4 


Mr. McCurdy —I desire here to put in evidence a copy of the let¬ 
ter of instructions to agents, and others, in respect to loans on prop¬ 
erty. It is as follows : 

The Mutual Life Insurance Company of New York, | 

144 and 146 Broadway, r 

New York, April 8, 1875. ) 

, Esq., County , N. Y .: 

Dear Sir —I take pleasure in informing you that at a recent 
meeting of our finance committee, it was decided to receive from you 
applications for loans on property in Erie county. 

The general rule to be observed in appraising farm property, by 
persons recognized by us as agents for applicants for loans, are as 
follows: 

We are not desirous or willing to lend money to build up broken 
down or dilapidated farms. We loan only on property occupied and 
cultivated by the owner in a thrifty manner, mostly cleared of tim¬ 
ber, well fenced, and furnished with suitable and substantial build¬ 
ings. It is also desirable that it should be conveniently situated with 
reference to some steady market for its produce, and likely at all 
times to command a sale. The character of the owner himself is also 
of importance, as we wish to intrust our money only to steady, indus¬ 
trious men, competent to manage their affairs with intelligence and 
skill As you will infer from wdiat I have already said, we loan 
only on farms outside of the large cities, and do not entertain appli¬ 
cations upon village property. Our limit is forty per cent of the 
fair cash value of the land, exclusive of the buildings upon it. 

You will be good enough at your earliest convenience to forward 
for our approval, the names of such persons as you may select to 
make appraisals of farms within your district. These should be resi¬ 
dents of the locality in which they are called upon to examine prop¬ 
erty and familiar with the prices of real estate in their vicinity. 
They should also, as far as possible, be persons of position and promi¬ 
nence in their respective communities, so as to be more or less per¬ 
sonally acquainted with the various applicants. It is hardly neces¬ 
sary to add that they should be of strict integrity and personally 
uninterested in any application they may forward. In addition to- 
their appraisal, it is expected that you will, in all cases, visit and 
examine the farm yourself, and report to us your own opinion of its 
character, and the eligibility of the loan. 

Loans on city property are made on a basis of not exceeding forty 
per cent of the land and buildings, where the latter are of good 
character. We prefer good dwelling and store property in central 
and improving localities; manufacturing establishments, tenement- 
houses and all poor or depreciating property we wish to avoid. 
Where loans are based in any degree on the value of the buildings, 
policies of lire insurance in acceptable companies, to an amount 
which will be designated, will be required as collateral. 

After receiving from this office a notification of the acceptance of 
any loan, you will prepare the bond and mortgage and a full abstract 


337 


of the title. The mortgage should be recorded and included in the 
abstract, and all the papers then sent to our solicitor, Hon. O. H. 
Palmer, of this office, for his approval. 

Our check for the amount, in accordance with your draft, will be 
returned to you. Judge Palmer makes no charge. 

You will understand, that although we depend upon you to fur¬ 
nish us with full and accurate information about the security offered 
for every loan, you act as the agent of the borrower and not of the 
company, and are to look to him exclusively for compensation for 
your services. 

We of course expect that you will not charge him more than you 
do your individual clients for similar services; but, that is a matter 
entirely for arrangement between yourself and him, and one with 
which we are unwilling to have any connection. 

I will forward you, in a few day's, a full supply of the necessary 
blanks, which I think you will find comprehensible without any fur¬ 
ther explanation. 

With my best wishes for your success and hoping to hear from 
you soon and often, 

I remain yours, very truly, 

(Signed) RICHARD A. McCURDY, 

Vice-President. 

Adjourned until Thursday morning March 29, 1877. 


Thursday, March 29, 1877. 


The committee met on Thursday morning, March 29tli, at nine 
o’clock. Present—The full committee, Mr. Graham in the chair. 

Charlton T. Lewis sworn. 

Examined by Mr. Moak : 

Q. Mr. Lewis, are you secretary of the Chamber of Life Insu¬ 
rance ? A. Yes, sir; secretary and treasurer. 

Q. How long have you been? A. I was elected in November, 
1873, three years and a-half ago. 

Q. Has there been a transaction, or was there a transaction by 
which the Charter Oak was sold out, or reinsured ’, in any case? A. 
not that I know of. 

22 



338 


Q. You never heard of it? A. There was a transaction by which 
there was a change in the management of the Charter Oak com¬ 
pany ; I don’t know any thing about the sale or reinsurance. 

Q. What do you mean by change in management ? A. The pre¬ 
sident of the Charter Oak was James C. Walkley, of Hartford, and 
the change that was made was by his resigning and the election of 
Mr. Edward R . Wiggins, of Boston, as president; there was some 
changes made in the board of direction at the same time, about which 
I was informed; Mr. Henry James Furber was admitted as one of 
the trustees, and appointed its financial manager. 

Q. W r as there any consideration paid to the old president for his 
retiring? A. Hot that I know of. 

Q. You never heard of it? A. Ho, sir. 

Q. Were not certain papers included in that arrangement to your 
knowledge? A. I have heard that there were. 

Q. Have you seen them ? A. The contract with regard to the 
change, you mean? 

Q. Yes, sir? A. Ho, sir, I never saw it; I never saw the 
paper to the best of my recollection ; I heard a great deal of talk 
about it. 


By Mr. Weiant: 

Q. Have you seen any papers relating to the transaction? A. Oh, 
yes, I have seen a good many papers; I am now speaking of the 
contract. 

By Mr. Mo^k : 

Q. What papers did you see ? A. I saw a great number of papers 
at the time. 

Q. What papers? A. I do not know that I can describe them. 

Q. Who did you say the new president was? A. Mr. Edward 
R. Wiggins. 

Q. Hid you get any thing paid to you directly or indirectly for 
your services in that matter? A. There was something paid. 

Q. Or for procuring that contract? A. I don’t know there was 
in procuring, in that sense, applied to it; the transactions were con¬ 
ducted directly with Mr. Wiggins and the officers of the company; 
trustees on the one side, and Mr. Furber on the other. 

Q. When was that transaction? A. The negotiations began, I 
think, in August or thereabouts, 1875 ; the change in the manage¬ 
ment was made at the same time, or during the winter of 1875 and 
1870, but the date it was done I don’t remember. 

Q. You said you received something on account of the services 
rendered in the transaction; how much did you receive, in all, from 
anybody ? A. I received in all $12,500. 

Q. From whom did you receive it ? A. Five thousand from Mr. 
White. 

Q. Who was Mr. White? A. He was vice-president and treasurer 
of the Charter Oak. 

Q. You received $5,000 from Mr. White? A. Yes, sir. 


339 


Q. Where did he live ? A. In Hartford. 

Q. What was his first name ? A. Samuel H. 

Q. He held the position of vice-president in the old company ? 
A. Yes, and holds it still. 

Q. He retained his position? A. Yes, sir. 

Q Who did you receive the balance from? A. I received the 
balance from Jacob C. Ilorton. 

Q. Who is Mr. Horton? A. He was a gentlemen in Hew York, 
who had formed the acquaintance of Mr. Wiggins on his first com¬ 
ing to Hew \ ork, and with him the contract was made by Mr. 
Wiggins, as I understood, for the purchase of the stock of some life 
insurance company, which I think was not named at the time. 

Q. Well, it turned out to be this company, did it not ? A. I don't 
know whether or not it was this company that was in view at this 
time. 

Q. Well, he made a contract with Mr. Wiggins for the purchase 
of some stock, in fact ? A. So I understood ; I think the contract 
was to this effect; that if Mr. Wiggins succeeded in a certain time 
in securing a majority of stock in any life insurance company, and 
entered that business, he was to pay Mr. Horton §20,000. 

Q. It was in a life insurance company ? A. Oh, yes. 

Q. It was a sort of excursion then to see what life insurance com¬ 
pany he would get? A. Yes, sir, I so understood from Mr. Ilorton 
and Mr. Wiggins, but I think his views at that time were directly 
on the Charter Oak. 

Q. Did he purchase and obtain the majority of the stock of the 
Charter Oak ? A. He did not, but he had entered the life insurance 
business and became president of the Charter Oak. 

Q. Well, Mr. Horton paid you $7,500 ? A. Yes, sir. 

Q. For what? A. For advice and aid. 

Q. What services did you perform in that matter? A. I was not 
aware that I had performed any services for Mr. Horton, but I had 
performed a good many for the company. 

Q. But had you performed any for Mr. Wiggins? A. I had given 
him advice and counsel every day through the whole transaction. 

Q. Well, can you state what services you rendered ? A. Well, 
counsel every day through the entire business, and the consummation 
of the transaction. 

Q. Are you a lawyer ? A. I am, sir. 

Q. Practicing law ? A. Yes. 

Q. What services had you rendered for which he paid you $5,000 ? 
A. I was retained by him as counsel when the change was proposed 
in the Charter Oak; I declined to serve at first because I had 
accepted a retainer to serve the other parties, but when they came to 
me and requested I should serve, they said that they had seen Mr. 
Wiggins and consented that I should serve him. 

Q. They had consolidated their interest then ? A. Ho, they were 
conflicting interests all the time. 

Q. Who was the parties you had the contract with? A. Well, the 
only one I had was with Mr. Ilorton, but he said I should serve Mr. 
Wiggins as well. 


340 


Q. The short of it is, that what you did in the shape of services 
in procuring that change you received $12,500; I mean the change 
in the directorship or management of the Charter Oak? A. For 
services I rendered in the transaction, I received that sum. 

Q. For services you rendered in getting one man in and another 
out, you received $12,500 ? A. No, sir, it was of quite a different 
character. 

Q. What else did you do ; enumerate all you did ? A There are 
some things I can’t tell, inasmuch as they are confidential between 
the counsel and the client; but I will state one thing which is the 
sum of it all; they said my services were such that I had prevented 
the wrecking of the company, for at the time they were falling, and 
would have fallen, but for my services, into the hands of parties who 
were bent on breaking the company and wrecking it. 

Q. Well, the old president was turned out or compelled to retire ? 
A. No, he retired. 

Q. What did you understand the effect of it to be? A. Well, I 
understood he resigned voluntarily. 

Q Because circumstances were such that he could not remain 
longer? A. In so far as I understand it, Mr. Walkley was not only 
president of the Charter Oak, but of the Connecticut Valley Rail¬ 
road, and the interests of the companies became diverse; the Charter 
Oak had invested over $1,000,000 in the bonds of the company, and 
the Charter Oak in order to save itself assumed that it was necessary 
to realize the amount of the bonds; the interests of the two compa¬ 
nies at once became diversed, and as I understand, Mr. Walkley 
retired in order to give his whole lime to the railroad. 

Q. Then this gentleman that went in as preside nt, had he ever 
been a director in an insurance company to your knowledge ? A, 
No, not to my knowledge. 

Q. Had he ever been connected with an insurance company in any 
way, to your knowledge? A. I don’t know that he had, except as 
counsel. 

Q. What was his business ? A. He had been a railroad man, and 
one of the principal men in forming the international line of railroad 
between Boston and St. Johns; you may have heard of the road. 

Q. How long before that contract was made, or before he made 
the contract, was it that he agreed that if he en tered the insurance 
business, or became president, he would pay you this sum ; how long 
was the contract made before the change took place in the Charter 
Oak ? A. My impression is, it was about four months, may be five. 

Q. During that four months was a considerable portion of the 
stock purchased for Mr. Wiggins by Horton, or by his direction ? 
A. I don’t think it was; I don’t know who the stockholders of the 
Charter Oak were, or are. 

Q. Then you don’t know any thing about that matter? A. No, 
sir. 

Q. How long was it after it began and your connection commenced 
with it, until it was finally completed ? A. About four or five 
months. 


341 


Q. In other words, the transaction was progressing, not to exceed 
four or five months ? A. I think not. 

Q- And for your services during that time you received $12,500 ? 
A. Yes. 

Q, What other business did you transact during the time ? A. Do 
you want an account of my private business ? 

Mr. Husted. —I think not. 

Mr. Moak.— I mean the ordinary business you were engaged in. 

By Mr. Wei ant : 

Q. You were engaged in professional business as a lawyer? A. 
No; I was not; when I was appointed secretary of the Chamber of 
Life Insurance I made this reservation, that I would continue the 
practice of the profession, without interference from them, provided 
I would confine it to life insurance in some way; I ceased to hold 
myself out as a general practitioner, but continued to hold myself 
ready to act as counsel for any life insurance company; I did no 
other business professionally since. 

By Mr. Moody : 

Q. You were secretary of the Chamber of Life Insurance at the 
time you received this? A. Yes. 

By Mr. Moak : 

Q. What general business have you had for the past three or four 
years ? A. Nothing but the business of the chamber. 

Q. Have you received pay for other services in insurance matters 
during that time, other than those you have spoken of, and as secre¬ 
tary of the chamber? A. Yes; I have several times. 

Q. Well, what, and to what extent? A. I could give you a tran¬ 
script of my fee book if you need it. 

Q. I mean in connection with the insurance business? A. I can 
give you the aggregate of all I have received during three years; it 
is more than $2,500 and less than $3,000; no—taking in three and 
a half years from the time I was elected secretary; it is more than 
$5,000 and less than $5,500. 

Q. What was that received for—-what species of services ? A. 
For a great variety of services rendered, chiefly to insurance com¬ 
panies. 

Q. Give the largest item ? A. It was for services rendered in Iowa 
before the constitution of the chamber; it was my services there 
that immediately led to the reorganization of the chamber, which 
had existed before, and my election as its secretary. 

Q. What services did you give them ? A. The Legislature of 
Iowa had passed, six or seven years ago, an act which levied certain 
fines and penalties on companies transacting business in the State 
for certain technical infractions of the law. 


.342 


By Mr. W eiant : 

Q. What were they ? A. The principal item was this: the law 
required that a minute statement of the assets and liabilities of each 
insurance company doing business should be filed in the office of the 
Auditor-General within thirty days after the first day of January of 
each year, and if they failed to file it, for each failure a fine of $100 
a day was levied and collected by the State; that went on for three 
or four years, and as none of the companies were able to comply 
with it and give an actual computation of their assets and liabilities, 
and furnish it within thirty days, they filed their reports aft erward, 
in a reasonable time and the Auditor-General accepted it; at the end 
of three years there was an association of lawyers formed in Dubuque 
and in the neighborhood, to hunt up the records and ascertain which 
of the companies had been liable to the penalty of $100 a day, and 
to bring suit in the name of the Attorney-General of the State for 
the recovery of the penalties; the aggregate penalties to which the , 
companies were liable amounted to $1,500,000; I went to Iowa, 
represented the matter before the executive officers of the State and 
a committee was appointed to look into the facts of the case, the 
result of it was that a law was passed rescinding the act and suspend¬ 
ing the suits in effect, abolishing the penalties but giving a reason¬ 
able time for the companies to compute their liabilities and assets 
and file their statements with the Auditor-General before any pen¬ 
alty would be incurred. 

Q. Did the new law abolish all the penalties? A. No, but it gave 
them time to file their statements and imposed a reasonable penalty 
in case of failure; it was something, a mere trifle compared with 
$100 a day. 

Q. What did you receive for those services ? A. The companies 
agreed to pay me $2,500, but I did not get all that; I really got 
about $2,200 ; the difference being that the companies in making the 
assessment made it too small and I didn’t care to ask them to go 
through with another assessment. 

Q. Well, how long did it continue? A. Well, it was progressing 
in the neighborhood of three months; I visited Iowa twice 

Q* Were your expenses paid? A. Yes sir. 

Q. Well, how much did that amount to ? A. Two hundred dollars, 

I think. 

Q. Did you receive or disburse any other money on account of the 
transaction? A. Yes, sir. 

Q. What ? A. 1 don’t remember; the chief item was the counsel 
fee to the principal firm in Iowa for investigating the law and pre¬ 
senting a brief. 

Q. How much was paid for that ? A. I don’t recall it; my im¬ 
pression is it was about $2,500, it may have been $2,000. 

Q. Did they appear? A. Mr. Henderson of the firm of Yan 
Derzee & Henderson appeared. 

Q. Did they pay your extra expenses, that committee ? A. They 
did. 

Q, Do you know whether they used personal influence with them ? 
A. I do not know 


343 


Q. Or were you informed that they did ? A. I remember that 
the members of Dubuque were personal friends of theirs, and they 
took a very great interest in the matter; the bill was recommended 
by the Governor, and there was no opposition to it. 

Q. Did you understand they used their personal influence with the 
members, I ask you ? A. I do not know that they did; there was 
no consideration, however, paid for any personal influence; the thing 
was carried through as a matter of public interest, and the leading 
press of the Strate took a deeo interest in it on the ground that it was 
a disgrace to the State to exact money under such circumstances; I 
went personally to the editors of several leading papers and talked 
the matter over with them and found them perfectly in accord with 
the position I took, although they did not attach so much import¬ 
ance to it as I desired them to. 

Q. Well, this was the largest item you paid out? A. Yes, sir. 

Q. Did you give it? A. It was either $2,000 or $2,500. 

Q. Was any thing allowed for your individual expenses at that 
time? A. 1 es, sir; some small sums; I do not know what they 
were. 

Q. Well, how much aside from the attorney’s fees? A. I couldn’t 
safely venture on a statement. 

Q. Well, give us a general idea of it—about how much? A. I 
can give you what the items are. 

Q. Can you not give us a general idea ? A. I should say they 
would not exceed $500. 

Q. Well, w r hat were they for? A. For several things—printing, 
and some advertising in newspapers. 

Q. Now, how many papers or periodicals did you advertise in ? 
A. I don’t think of but two. 

Q. Where? A. One was in Des Moines, the capital, and the 
other was Dubuque; I do not know what the names of the papers 
were. 

Q. Well, what was the purport of the publications—you had pub¬ 
lications made? A. Yes, sir. 

Q. In the interests of the bill? A. Yes, sir; it was correspond¬ 
ence setting forth the facts. 

Q. Originating from where? A. From where it is dated. 

Q. Don’t you know who wrote the correspondence ? A. I cannot 
be certain whether or not I wrote it myself; it is several years ago; 
I either wrote it, or it was furnished on my points. 

Q. And you had the correspondence published in those news¬ 
papers? A. Yes, sir. 

Q. Not to exceed two in the State ? A. I think not. 

Q. Can you tell us the purport of the correspondence? A. It was 
a statement of the facts I have stated to the committee, only con¬ 
siderably more in detail in regard to the nature of the law and 
fines. 

Q. What did you pay for having those publications made ? A. 
For the space occupied. 

Q. Can’t you give us a general idea ? A. I said, I think, it would 
not exceed $500 in the aggregate; I may state that I allow myself a 


344 


limit, because my recollection is dim; my impression is it did not 
approach that sum. 

Q. Did you pay any other disbursements ? A. No, sir. 

Q. Did you have any other person engaged ? A. \ es, I had a 
large number engaged using their personal representations and 
influence. 

Q. Did they receive any compensation ? A. They were agents of 
the companies doing business in the State, and it was alleged that 
some of them claimed, compensation; I, however, insisted that they 
were interested in the case as agents, and that as agents of the com¬ 
panies we were entitled to the services of all of them in the State 
without compensation or fee. 

Q. Do you know whether they received compensation? A. I 
know that they did not; I know their letters were sent to me, and I 
took the ground that their services were such as we were entitled to 
receive, and that they were not entitled to compensation; that is the 
ground I always took. 

Q. Had you any one to assist you in effecting the changes you 
speak of, beyond the counsel? A. No, sir, I am confident we did 
not. 

Q. You employed no other person to assist you besides the counsel 
and the agents? A. Certainly not. 

By Mr. Moak : 

Q. Did you receive, directly or indirectly, any thing else on account 
of this transaction in regard to the Charter Oak from any body ? A. 
Never a dollar. 

Q. Do you know how much Mr. Horton received for his services ? 
A. He received $7,500 ; that is, he received $15,000. 

Q. Well, who did he receive that from? A. From Mr. Wiggins. 

Q. Why did you say $15,000 just now ? A. Because he paid me 
$7,500 and kept $7,500. 

Q. Well, he received $15,000, and paid one-half of it to you? A. 
Yes. 

Q. Is that all he received ? A. So far as I know. 

Q. Then how came you to be paid $5,000 by the other parties ? 
A. After the transaction was over, they wrote me to ask what 
my charges were. 

Q. Who did ? A. Mr. White wrote me, but it was in the name 
of Mr. Wiggins ; it was written by Mr. White; I declined to make 
any charge on account of the services, on account of the confidential 
nature of them, and I stated I should have done precisely as I had 
done without any compensation, to save the company from a great 
scandal, and from practically being wrecked; they wrote me back 
inclosing $5,000 by check. 

Q. Was it by check or money ? A. Yes ; it was Mr. White’s 
check, but he told me the money came from Mr. Wiggins. 

Q. Did any one else receive any thing ? A. Not that I know of. 

Q. What was the means used for bringing about the change ? A. 
I don’t exactly understand the bearing of your question; do you 
mean what influences were brought to bear ? 


345 


Q. What method was pursued to bring about the result ? A. As 
I understand it, Mr. Walkley, the president, resigned, and one other 
member of the board of direction resigned, and Mr. Furber was elec¬ 
ted a member of the board, and a gentleman whose name I can’t 
recall just now, who is now acting as superintendent of agencies was 
also elected a member of the board ; there were two vacancies, and 
the board was complete with those two gentlemen’s elections; Mr. 
Wiggins was elected the president, and a gentleman from Baltimore, 
whose name I can’t think of, was elected as the superintendent of 
the agencies. 

Q. Who was Mr, Furber? A. He was vice-president of the 
Universal Life Insurance Company. 

Q. What transactions have occurred in regard to the Universal 
Life reinsuring part of the Charter Oak risks ? A. It was distinctly 
agreed from the beginning, and Mr. Furber gave me his personal 
word of honor, before one step was taken in the transaction, that 
under no circumstances should any part of the risks of the Charter 
Oak be reinsured in the Universal. 

Q. Did he retain his position in the Universal as well ? A. Yes, 
sir. 

Q. Does he still retain it ? A. He does. 

Q. Did you see an expose of the transaction of the Universal pub¬ 
lished in Caverley’sWeekly Age ; you have seen exposes of the char¬ 
acter of the business done by the Universal, have you not ? A. I 
have seen a great variety of things on different matters. 

Q. And you made it one Qf the terms of the bargain with Mr. 
Furber that under no circumstances the Universal should reinsure 
any of the risks of the Charter Oak ? A. I did not say I made it 
a condition ; but before one step was taken he gave me his personal 
pledge that under no circumstances should that be done. 

Q. Why did you exact that pledge from him ? A. I did not exact 
it; it was a voluntary pledge. 

Q. Well, why was it made ? A. Well, Mr. White, at the time the 
proposition was made that Mr. Furber was to be brought into the 
company, distinctly refused to negotiate with him ; he had seen 
transactions with Mr. Furber in the Universal which made him say 
to me that any transaction with Furber would be regarded by the 
public as a step toward the wrecking or reinsurance of the Charter 
Oak. 

Q. That was the impression he had of the Universal? A. Yes; 
and it was the impression in different parts of the country, too. 

Q. That was a fact in your mind ? A. Yes, sir. 

Q. The general reputation of the company was bad, was it not; I 
mean of the Universal? A. No ; but I would say that the company 
had been very grievously attacked by certain papers, and just as 
vigorously defended by other papers; it was an energetic tight while 
it lasted. 

Q. Was it not charged that the company was taking at lower rates 
than any other company impaired risks ? A. No, sir, I do not know 
that I ever heard such a charge as that; if ever such a charge was 
made it arose from this state of facts. 


34:6 


Q. If you never heard of it you can’t tell how it originated ? A. I 
heard something out of it which it has growm, but which is entirely 
different. 

Q. How long before Mr. Furber went in was this pledge made by 
Mr. Furber that under no circumstances should the Universal rein¬ 
sure any of the Charter Oak risks ? A. That was made before Mr. 
Furber met and before the officers of the Charter Oak consented to 
meet Mr. Furber or to say one word to him. 

Q. How long was that before the arrangement w T as made by which 
Furber went into the Charter Oak as one of the directors ? A. 
Speaking from my recollection I should say about two months. 

Q. Then the negotiation for the purpose of getting in Mr. Wiggins 
had been pending for two or three months before Furber came into 
the transaction ? A. Oh, yes, certainly it had. 

Q. How came Furber to be brought into the transaction, in what 
way, in consequence of Wiggins not being able to obtain the control 
of a majority of the stock? A. Yes, Wiggins came here as the 
representative of certain Boston interests, in an endeavor to get 
possession of that railroad, and they were interested in the Eastern 
railroad, which runs from Boston east; just at that time it met with 
a very great calamity ; before that it had been one of the favorite 
investments and the stock was very high, but suddenly it fell from 
130 to below par; I believe it fell down to twelve on short sales, 
and this sudden explosion made them withdraw from this proposi¬ 
tion, as they had not the money to invest. 

Q. Then the design originally was to obtain control of the Charter 
Oak, in the interests of a combination of railroad companies? A. 
Yes, to obtain the control of the company for the purpose of man¬ 
aging the railroad bonds held by the Charter Oak in connection with 
other matters. 

Q. In other words, the railroad and insurance company was to be 
used for mutual interest, is that it ? A. As I understood it, the stock 
of the railroad was to be obtained at as low a price as possible, and 
by getting that they obtain the control of the railroad, they were to 
issue bonds to the insurance company which would be received and 
acted upon, and perhaps they might obtain control over the entire 
stock. 

Q. So the stockholders of the railroad, in order to obtain control 
of that, they embarked in the insurance company ? A. They owned 
stock of other railroads connected with it. 

Q. Well, the holders of stock in other railroads desired to obtain 
. the control of the insurance company for the purpose of controlling 
those bonds? A. Yes, those bonds had a controlling effect on the 
road. 

Q. The design was to obtain the control of the company for the 
purpose of controlling those bonds and its effect upon the consoli¬ 
dation? A. Yes, sir. 

Q. In other words, the control of the insurance company was to 
be obtained as a means to control the railroad ? A. Yes; I am hardly 
giving what is correct legal evidence; I do not know of my own 
knowledge, but I am giving this from information. 


347 


Q. Who were the capitalists ? A. 1 don’t know the names of any 
of them. 

Q. Mr. Wiggins, when he started out to obtain the control of the 
Charter Oak, was acting with that view ? A. Yes, sir. 

Q. And in consecpience of the calamity to the railroad those cap¬ 
italists were unable to furnish him with the necessary assistance ? 

A TT • t/ 

. i es, sir. 

Q. And then he cast about for some other parties, is that it? A. 
^ es, at that time he became very deeply interested in insurance 
matters and desired to embark in it. 

Q. Then when those capitalists failed he looked around for some 
one else, and Mr. Furber was suggested as one of the persons who 
might do so ? A. Yes, sir, as far as I know that was the case. 

Q. Well, who else was suggested as some one who might be of 
service to him in obtaining control of the company ? A. That I 
can’t say. 

Q. Do you know or have you been informed as to whether the 
consolidation of the railroads was ever perfected ? A. I do not 
know; my impression is it has not been completed. 

Q. Do you know what became of the bonds of the railroad held 
by the company ? A. I know, as the public know, that they were 
sold to Mr. Edward Matthews in New York. 

Q. For how much ? A. They were given in exchange for a large 
amount of real estate in New York city—the bonds being taken at 
par as against the appraised value—there were three appraisers of 
the property, one of which was Mr. Edward Ludlow, and I forget 
the others. 

Q. Then soon after Mr. Wiggins obtained control of those bonds, 
those were sold to Matthews? A. Yes, sir, it was after that. 

Q. That would be last fall, then, some time ? A. Yes, last fall. 

Q. How much was the amount of those bonds? A. I think they 
were reported in the insurance report. 

Q. Well, the amount I want? A. It was something over a mil¬ 
lion—my impression is it was a million and a quarter—'you will 
find it in the report of the company to the Insurance Department. 

Q. Mr. Wiggins became president about when ? A. Well, I 
can’t say ; I think he became president in December , 1875 ; it was 
about that time; that is a rough estimate. 

Q. And Mr. Furber, immediately on being elected a director, 
what did he then become ? A. He became the financial agent of the 
company. 

Q. Then Mr. Furber, about the same time became the financial 
agent of the company? A. Yes, sir. 

Q. And h z resided where? A. Well, since that time he has 
divided his residence between the two; his residence is in New 
York, but he spends two or three days a week in Hartford. 

Q. He retained his position as vice-president of the Universal, 
also ? A. Yes, sir. 

Q. And he is a director of that company? A. Yes, sir. 

Q. Has he any other position than vice-president ? A. Not that 
I know of. 



348 


Q. Who is this Baltimore gentleman who got into the company ? 
A. I think his title is superintendent of agencies. 

Q. Do you know what the salary of Mr. Wiggins was as presi¬ 
dent of the company ? A. Only from hearsay; I have heard it 
mentioned at $12,000 a year. 

Q. How much was Mr. Furber’s? A. I do not know. 

Q. You never heard that? A. I think not. 

Q. Well, how much does that Baltimore gentleman receive? A. 
I don’t know at all. 

Q. What position does Mr. Furber now hold in the Universal ? 
A. Vice-president and he has been an agent. 

Q. Who is its president ? A. Mr. William Walker. 

Q. And who is the secretary? A. Mr. John H. Bewley. 

Q. Was there any sum, to your knowledge or information, that has 
been paid to any other person on account of this change in the Char¬ 
ter Oak ? A. Hot one dollar. 

Q. How, we will come back to the chamber ; have you been con¬ 
nected in any way with the transfer or reinsurance of any other 
company ? A. Hever. 

Cl I understood you to say that the character of the Universal, as 
a wrecking company, was severely attacked by some parties, and as 
vigorously defended by others ? A. Yes, sir. 

Q. And it was claimed by some parties well informed in insurance 
matters that they were taking dangerous risks, were they not ? A. 
They had taken dangerous risks, but I never heard any thing said 
about their premiums at all; they took dangerous risks on a higher 
premium during the first six months of the company’s existence, but 
they found it was a losing game and then they put their business on 
the same footing as every other company, and immediately stopped 
the business they had been doing, insuring then only first-class lives; 
they claimed they never took impaired risks except the first year of 
the existence of the company. 

Q. The character of the company, as a fair and honorable dealing 
company , is not good, is it ? A. I thought a few years ago it was 
not, but since that time I have received a full explanation and am 
satisfied I did the company an injustice. 

Q. Who did you obtain them from ? A. From Mr. Furber. 

By Mr. W eiant : 

Q. Is that company a member of the Chamber of Life Insurance ? 
A. It is. 

Q. When did it become such ? A. Some time in 1874. 

By Mr. Moak : 

Q. Is the^Etna a member? A. Yes, sir. 

Q. Give us a list ? A. There is the ./Etna of Hartford; the 
Massachusetts Mutual of Springfield; the Berkshire of Pittsfield, 
Massachusetts; the Connecticut Mutual; the iEtna of Hartford; 
the Charter Oak; the Connecticut General; the Continental of 
Hartford; the Travellers of Hartford ; the Mutual Life of Hew 


349 


^ork; the New \ ork Life; the Equitable; the Germania; the 
Universal; the Knickerbocker ; the Brooklyn ; the Globe Mutual; 
the Metropolitan; the Michigan Mutual; the Penn Mutual of 
Philadelphia; the National of the United States; the North-western 
Mutual of Milwaukee; the United States of New York; the Life 
Association of America in St. Louis. 

Q. Is the New Jersey Mutual a member? A. No, sir. 

^ Q. About when was the Chamber of Life Insurance formed ? A. 
The Chamber of Life Insurance was originally organized in the 
beginning of the year 1873. 

Q. Organized to what extent then ? A. By the union of eleven 
or twelve of the New York companies alone. 

Q. About what time in 1873? A. My recollection is, it was in 
April ; I had no connection with it at that time, and knew nothing 
about it. 

Q. When did you become connected with it ? A. In November, 
1873. 

Q. What was your business before that ? A. I had been editor 
of the New York Evening Post, and a practicing lawyer in New 
York. 

Q. To what extent did you practice? A. I began practice 1864, 
and had a very respectable practice, I think. 

Q. For how long did you practice? A. I think for si,x or seven 
years. 

Q. W hat had you been doing between that time and the time you 
became connected with the chamber ? A. I had been chiefly occu 
pied in editing the Evening Post. 

Q. When you became connected with it, did you give up your 
position as editor of the Evening Post ? A. I had done so before. 

Q. What were you engaged in between that time and the time 
you became secretary of the Chamber of Life Insurance ? A. I was 
doing a little work and was engaged as counsel when I could get it. 

Q. How long previous to that had you severed your connection 
with the Evening Post ? . A. About two years. 

Q. Had you had any experience in life insurance ? A. I had lfad 
a good deal of experience. 

Q. What ? A. 1 do not know that I can give you the details; the 
character of my experience was acting as counsel for life companies. 

Q. To what extent ? A. I had been retained by the Mutual Bene- 
flt of New Jersey, and the Mutual Life of New i ork, and had done 
services in connection with others for several years. 

Q. What services had you rendered for the Mutual of New York ? 
A. Quite a large variety of services, such as they choose to employ 
me from time to time. 

Q. Strictly legal in their character? A. Some of them were 
strictly legal, others of them were literary. 

Q. About what time was the difficulty between Stephen English 
and the Mutual ? A. I do not know what time it originally was ; 
the attacks of Stephen English on the Mutual were in full blast in 
1873. 


350 


Q. Running down to what time in 1873 ? A. I cannot say exact¬ 
ly ; I should say toward the latter part of the year. 

Q. About what time in the year was it English was imprisoned in 
the jail in New York, as you understood it, on the orders of arrest 
obtained by the Mutual? A. I think it was in the spring of 1873. 

Q. And continued down to how long a period ? A. I don’t know, 
I think it was until about July. 

Q. July? A. I should think so. 

Q. Which was first in the order of time, English’s discharge from 
the jail or the forming of the chamber? Q. Oh, the formation of 
the chamber was long before that. 

Q. I mean the re-formation ? A. It was very much enlarged in 
November, 1873. 

Q. Did you have any thing to do with the arrangement of the 
difficulty between the Mutual and English ? A. Nothing what¬ 
ever. 

Q. No connection with it, directly or indirectly ? A. I had no 
connection with any transaction between them, except I was con¬ 
sulted by the officers of the Mutual frequently, as I was acting as 
counsel in divers matter at the time, and I was confidentially con¬ 
sulted by them as to the attacks of the Times on them. 

Q. At those times were you doing business or connected with the 
Equitable? A. Not at that time. 

Q. I understood you to say that you did business for the Equit¬ 
able ? A. No, sir; I never did business with the Equitable ; at that 
time I had various matters on hand in which the Equitable was 
interested ; there were certain common interests in which they were 
connected, and I was consulted by both. 

Q. What was the nature of it ? A. It was as to the competition 
between them which was injuring both, and there were various agree¬ 
ments entered into in which I was consulted by the officers of the 
company. 

Q. Was that before or after the organization of the chamber? A. 
Before the re-organization of it. 

Q. Before you became connected with it?- A. Before I had any 
knowledge of it. 

Q. About what time was the war between the Equitable and the 
Mutual compromised ? A. The agreements between them were 
made during 1873. 

Q. About what time, during 1873? A. That occupied a good 
deal of the latter part of the year; I should say from July on. 

Q. Were they completed before the chamber was organized or 
after ? A. They were completed in principle and outline before the 
chamber was organized; there were some details which had to be 
arranged. 

Q. Previous to that had the Equitable been a member of the 
chamber? A. Yes, sir. 

Q. And was the Mutual? A. No, sir; it had not been. 

Q. Was it a part of the understanding that the Mutual should 
become a member of the chamber? A. Well, that is not exactly a 


351 


statement of it; during the progress of the arrangement, if I recol¬ 
lect the competition between the Equitable and the Mutual, it oc¬ 
curred to them both on consultation with other companies, 
that a permanent arrangement with regard to competition of life 
companies would be desirable, and the chamber would furnish the 
basis for such an organization ; as such they were induced to come 
in and carry on the organization for one of those purposes. 

Q. About what has been the contribution of the HCtna to this 
organization ? A. The largest contribution ever made by any com¬ 
pany to the chamber, and the only one, has been one-hundredth of 
one per cent of the gross assets of the company; by looking at the 
gross assets of the company, we shall find what the contribution has 
been. 


Q. I am getting at about what was the annual contribution of the 
HCtna ? A. It has been about $2,100. 

Q. How much the Berkshire \ A. The Berkshire has never con¬ 
tributed more than $100. 

Q. How much the Brooklyn ? A. The Brooklyn has contributed 

$ 200 . 

Q. Hid it not one year contribute $500? A. Ho, sir; I think 
not. 


Q. Has it never contributed to exceed that amount ? A. Hever 
at any one time. 

Q. I mean the annual contribution? A. There is never any 
regular annual contribution; my impression is there were two con¬ 
tributions one year, and the Brooklyn may have contributed $100 in 
1875. 


Q. Your impression is that, in 1875, all these companies made a 
contribution of twice the amount you gave ? A. I think there were 
two contributions made ; not of these full amounts. During the last 
three and a-half years there has been four contributions given by the 
companies of one-hundredth of one per cent of the assets at the 
time ; T am giving the amount now of the assets on the thirty-first 
of December, which of course are the largest. 

Q. Were they approximately the same? A. Yes, sir. 

Q. Well, the Charter Oak; what is its contribution? A. The 
largest contribution of the Charter Oak has been $1,300. 

Q. The Connecticut Mutual ? A. The Connecticut Mutual, the 
largest contribution of that was $1,100. 

Q. The Connecticut General ? A. One hundred dollars. 

Q. The Continental of Hartford ? A. That is not down here; it 
does not do business in Hew York; my impression is it has contri¬ 
buted $300. 

Q. Has it not contributed considerably more ? A. Ho; certainly 
not more; I think that is the extent it lias contributed. 

Q. Well, the Equitable? A. Well, the Equitable; its largest 
contribution was $2,900; no, I must be mistaken, it was $2,800. 

Q. The Germania ? A. The largest the Germania has ever con¬ 
tributed has been $700. 

Q. The Globe ? A. The Globe has contributed $100 at the largest, 
$300 before. 


352 


Q. The Knickerbocker? A. The Knickerbocker; the last con- 
tribution is $600. 

Q. Is that about the average? A. I had thought it was $700, but 
I find it was $600. 

Q. The Massachusetts Mutual ? A. Its last contribution was 
$600. 

Q. Has it ever been higher than that ? A. No ; the last sum was 
$600; before that it was $500; that is the largest it has ever paid. 

Q. The Metropolitan ? A. That has never been over $100. 

Q. The Michigan Mutual ? A. One hundred dollars. 

Q. The Mutual Life ? A. That varies very much; the last con¬ 
tribution was $7,800. 

Q. Last year I understood a gentleman to say they paid $12,000 ? 
A. Ho, sir, they did not. 

Q. Well, that is what a gentleman swore yesterday? A. He 
must have been mistaken then; he made a great mistake ; it is pos¬ 
sible the contribution for 1875, by the Mutual Life, was not paid 
until 1876. 

Q. He said the annual contribution was $12,000 ? A. Then he is 
entirely mistaken. 

Q. 1 assume he knew what the company paid? A. Well, it is 
possible they might have paid $12,000 in one year, by being back 
in their contributions; the whole amount for the last year was 
$7,800. 

Q. Well, the National of the United States? A. Three hundred 
dollars. 

Q. Is that the highest it has ever paid ? A. I think it is. 

Q. The Hew York Life? A. Three thousand dollars was the 
highest; before that it was less. 

Q. The North-Western Mutual ? A. One thousand seven hun¬ 
dred ; it was less on previous payments; that has grown very 
rapidly. 

Q. the Penn Mutual ? A. The Penn Mutual paid last time $500 ; 
before that, $400. 

Q. The travellers 1 ? A. The Travellers’ paid $200 the last time, 
and, I think, every time. 

Q. The United States, of Hew York? A. The United States 
paid $400 last time; never more than that. 

Q. The Universal? A. The Universal paid $500 the last time ; 
before that it was always less. 

Q. The Life Association of America ? A. I think it was $400; 
yes, that was $400 last year. 

Q. That is the amount paid to the Chamber of Life Insurance X 
A. Yes, sir. 

Q. Who has the management of the chamber? A. During the 
interval of the meetings of the chamber the business is managed by 
the executive committee. 

Q. That is ostensibly the managing body ? A. There is nothing 
ostensible about it. 

Q. Do they have trustees, or managers or directors? A. They 
have an executive committee. 


353 


Q. Well, don’t they have trustees, or managers or directors ? A. 
Nothing under that name ; they have an executive committee. 

Q. Well, how many compose it? A. It is composed of seven 
members, elected annually with president and vice-president, ex 
officio. 

Q. Who have been the executive committee in the last three 
years ? A. There lias been some change each year; the present 
members of the executive committee are the chairman, J. W. Alex¬ 
ander, the wc^-president of the Equitable; J. G. Batterson, Win. 
II. Beers, J. L. Green, Hugo Weizendonck, Robert A. Grannis, 
who was the secretary of the Metropolitan Life, and F. S. Winston, 

S esident of the Mutual Life ; ex officio , Mr. Hewey, president, and 
r. McCurdy, vice-president of the chamber. 

Q. Who were its directors the year before; in what respect did 
they vary? A. In 1875-6, Win. H. Beers was president of the ex¬ 
ecutive committee, Mr. Alexander, Mr. Grannis, Mr. McCurdy, 
Mr. Weizendonck and Mr. Frost, and the president and vice-presi¬ 
dent of the chamber, ex officio ; the president of that year was Col. 
Green, of Hartford, president of the Connecticut Mutual; and Mr. 
Hewey, of Philadelphia, vice-president. 

Q. How long has the Universal been a member of the chamber ? 
A. I think the Universal joined in 1874, nearly a year after the 
chamber had been reorganized. 

Q. When was this explanation made to you which changed your 
views of the character of the L T niversal ? A. They had been made 
at different times, as I had occasion to inquire. 

Q. Well, before or after the LTniversal became a member? A. 
Partly before; to a great extent after that time. 

Q. Has there ever been any project for the reinsurance by the 
Universal of any risks other than the Charter Oak ? A. Not that 
I know of. 

Q. Have you heard of any ? A. No, except that I have been in¬ 
formed by Mr. Furber that a proposition has been made to him for 
the reinsurance of other companies. 

Q. What other companies ? A. I don’t know that I can desig¬ 
nate them now' but he designated them. 

Q. Was not the New Jersey Mutual one of them? A. I don’t 
know that it was. 

Q. Do you know it was not ? A. No, I don’t know it was 
not. 

By Mr. Wei ant: 

Q. Was the World one of them? A. I don’t know; I never 
heard any thing about it. 

By Mr. Moak : 

Q. How often are the meetings of the chamber held? A. The 
regular meetings, under the present articles of the association, are 
annually; the annual meetings are held in May; we used to have 
quarterly meetings, but it was found they came at inconvenient 
23 


354 


times, and it was arranged that the only stated meeting should be 
the annual meeting , and stated meetings should be had by appoint¬ 
ment ; the number of meetings would average five. 

Q. By whom are special meetings called ? A. By the president, 
at the request of any two companies of the chamber. 

Q. Where are the meetings held ? A. At the rooms of the cham¬ 
ber in the city of New York. 

Q. The meetings are private ; I mean no one is admitted except 
members of the chamber? A. The members are companies, and 
their representatives may be any one one who is designated by the 
executive officers of the company; they are all allowed to be 
present. 

Q. The proceedings are never made public, are they ? A. They 
are usually made public in this way: that after each meeting I gen¬ 
erally give to the reporters my rough minutes of the transactions, 
and they take from them what they want. 

Q. Is any one admitted to the deliberations, except the represen¬ 
tatives of the members ? A. No, sir. 

Q. There • have been repeated applications for admission, have 
there not? A. Oh, yes, sir; at almost every meeting the reporters 
come and ask for admission. 

Q. And that has been refused? A. Yes, sir. 

Q. Does the president receive any salary ? A. No, sir. 

Q. Does any officer, except the secretary? A. No, sir; it is pro¬ 
hibited by the articles of association. 

Q. IIow much does the secretary receive ? A. His present salary 
is $10,000 a vear- 

'r- «/ 

Q. When was that fixed ? A. In January, 1875. 

Q. How much was it previous to that? A. Seven thousand dol¬ 
lars ; Mr. Beers stated it was $6,000 at the time he was chairman, 
but he made a mistake; it was $7,000 ; it was afterward increased 
to $10,000. 

Q. Is one of the objects ot this institution to watch what is called 
obnoxious legislation throughout the country ? A. Well, its business 
is to watch all legislation of every kind, and keep on record a com¬ 
plete copy of every particle of legislation in force anywhere, and in 
every country, on the subject of life insurance, so that information 
can be given to any of the members, if they so desire it. 

Q. One of its objects is to watch as far as possible and prevent 
provisions which would be called obnoxious legislation in life insur¬ 
ance? A. Yes, sir. 

Q. Was there a time, a few years ago, when you went to Canada 
for that purpose? A. Yes, sir; a year ago; I stopped a month 
there. 

Q. At what place ? A. In Ottawa. 

Q. The Dominion Parliament? A. Yes, sir. 

Q. You were not at ^Provincial Parliament? A. Oh, no ; the 
Dominion Parliament has jurisdiction over that matter. 

Q. You were there about a month ? A. I was in all ; I paid three 
visits to Canada. 

Q. What season of the year ? A. It was in winter. 


355 


Q. How was tlie expenses paid? A. They were paid by the 
chamber. 

Q. In addition to the salary? A. Yes, sir. 

Q. What other capitals have you attended in all on that subject 
within the past three years ? A. Personally, you mean ? 

Q. First, personally, yes? A. I attended—I was in Harrisburg, 
the capital of Pennsylvania, some two years ago; I was in Boston, 
the capital of Massachusetts, a few weeks since, and appeared before 
a committee of the Legislature; and then I was at Ottawa, the capital 
of Canada, and those are the only ones I have visited. 

Q. You inquired whether I meant personally; what do you mean 
by that inquiry? A. I meant by that to inquire whether you meant 
whether I had sent any one. 

Q. What other places have you sent any one to ? A. I have sent 
men several times to different places; once to Madison, the capital 
of Wisconsin; once I think to Springfield, the capital of Illinois ; I 
do not remember of any other instance. 

Q. Who did you send to Madison ? A. I cannot recall the name ; 
it was a gentleman with whom I had no personal acquaintance, but 
he was recommended to me by parties in the North-western of Mil¬ 
waukee. 

Q. What was the purpose of his attending ? A. It was to explain 
to the committee of the Legislature the effect of a certain tax law which 
was pending in the Legislature, and which it was thought would ex¬ 
clude from the State other companies doing business. 

Q. Was it not for the purpose of reaching a law of Wisconsin 
which provides that insurance companies doing business in that State, 
as a condition of their doing business there, should not remove their 
cases into the Federal courts ? A. No, sir; it had nothing to do with 
that; that law we regarded as unconstitutional, and we appealed to 
the supreme court of the United States against it. 

Q. Well, was it not for the purpose of preventing the passage of a 
law in reference to the refusal to issue licenses to any company to do 
business-in that State, who did take its business into the United 
States courts? A. No, sir ; it had nothing to do with that. 

Q. First, the law was passed that they should not remove their 
cases to the United States courts, and after that was declared uncon¬ 
stitutional, then a law was passed that any company who did so 
should not have a license given to them to do business in that State; 
was not that the law ? A, \ es, sir. 

Q. That case is still in litigation in the federal courts, is it not ? 
A. No, I think it is decided; it was practically decided on the ap¬ 
peal of the Home, of New York, from the decision of the authori¬ 
ties of Augusta, the State of Georgia; it was decided the State can 
frame any law it pleases for its own government, and can exclude 
any and all companies doing business in that State, if it so pleases. 

Mr. Weiant—W hat was the purport of this visit there ? 

Mr. Moak—I understood him to say it was some tax law, which 
was in effect, to prohibit other corporations doing business there. 


356 


By Mr. Moak : 

Q. Well, what was its purport? A. The bill proposed a heavy 
tax on premiums on all insurance companies doing business in that 
State from outside of the State. 

Q. Was that bill passed ? A. Oh, no ; it was easily defeated. 

Q. Well, what did you do in connection with it ? A. All I did in 
connection with it is a matter ot 'perfect straightforwardness and 
perfect honor; I am not ashamed of it. 

Q Well, what was it? A. All I did was to write a brief argument 
on the subject, setting forth, as a matter of public policy, the objec- 
tions to it, and I put it in the hands of a gentleman and requested it 
might be made as emphatic as possible before the committee of the 
Legislature; it was done and the bill was easily defeated. 

Q. You employed a man for that ? A. I did, indirectly, because 
his bill for expenses and fees was paid by the chamber. 

Q. Did he reside at Madison? A. No; I think it was Judge 
Vandyke, of Milwaukee ; it is my impression it was, but I cannot 
be certain who was the man ; I think it was he. 

Q. What was the amount paid him ? A. The amount paid him 
was his personal expenses and $100. 

Q. Did you make any other disbursements on that matter except 
the expenses? A. Nothing but the expenses and fees of that one 
person. 

Q. Well, about your individual expenses ? A. I did not go there; 
all the affair was managed for me by the managers of the North¬ 
western Life. 

Q. In Springfield, what was the legislation sought to be affected ? 
A. The legislation there was in regard to the practical working of 
the business and the assertion of certain fines and obligations in the 
policy prohibiting the company using some of the safeguards against 
fraud, which they had usually used; it is very indistinct in my mind, 
and I i an’t remember the particulars. 

Q. About when was that ? A. Only a few weeks ago. 

Q. Only recently ? A. Yes, sir. 

Q. Who was sent there ? A. I do not remember the name of the 
gentleman ; I didn’t see him personally : it is another of those ease& 
in which it was managed for me ; the president of the National Life 
of Chicago, and Mr. Ferguson, the agent of the Mutual Life Insur¬ 
ance Company, at Detroit, managed that matter under the advice of 
Judge Palmer, the president of the North-western Life; they had 
the management of the matter, and I left it entirely in their hands. 

Q. What was paid? A. Well, no bill for services has as yet been 
presented, but the amount will not exceed what we always allowed, 
that is, $100 for the argument and the personal expenses. 

Q. Well, what was the purport of the terms of the bill? A. I 
can send you a copy of the bill, if you want it. 

Q. Can't you give us a general idea ? A. It is very vague in my 
mind, but if I remember it was to prohibit the contesting of any 
claim on the ground of fraud, unless it acted to the actual loss of the 
company, and it was a prohibition of defenses after a certain time. 


V 


357 

Q. It was a limitation, then, to certain defenses? A, Yes, sir; 
but it was not alone that; there was certain other prohibitions affect¬ 
ing diverse interests. 

Q. Do you think that is obnoxious ? A. I think any bill for the 
protection of fraud is obnoxious. 

Q. That was in the interest of the policyholders, was it not ? A. 
No, it was directly opposed to it. 

Q. It prevented companies contesting policies ? A. The interests 
of every policyholder who is honest is in favor of an honest admin¬ 
istration, and opposed to fraud; the interests of every company 
should be made to identify itself with the interests of all its policy¬ 
holders. 

Q. Well, what was the legislation at Boston it was sought to 
prevent ? A. Not any ; it was sought to obtain the passage of a 
bill by the Massachusetts Legislature. 

Q. What ? A. In 1861 the Legislature of Massachusetts passed a 
law providing that any policy of life insurance which lapsed for 
non-payment should not stop the condition of the policy, but it 
should be continued in force. 

Q. Well that is what is called the Massachusetts bill, is it not ? A. 
Yes, that is the bill; in 1872 the Legislature of Massachusetts passed 
.a bill with regard to co-operative life associations, tending to bring 
them under the laws of Massachusetts similar to the other life insur¬ 
ance companies. 

Q. What do you mean by co-operative life insurance companies ? 
A. I mean all associations which engaged in life insurance, such as 
.the Masonic Association and other companies; the ob ject was to pre¬ 
vent an illegitimate business being done, and, indeed, to prevent any 
business being done without the supervision of the department; that 
law went on side by side with the law of 1861, until 1876, without 
any one suspecting that the bill of 1872 had anything to do with the 
bill of 1861 ; in 1876 the Supreme Court of Massachusetts decided 
that by the act of 1872 extending the act of 1861, it affected all 
companies not chartered in Massachusetts but doing business in it; 
the result of that was to compel companies of the State of Maine 
and Michigan, or any other State which had already incorporated 
provisions for non-forfeiture of policies, almost to withdraw, for they 
had to be brought under the law of Massachusetts, and the policy¬ 
holder would have his option when his contract would have lapsed, 
of choosing his method of non-forfeiture, which would destroy the 
principal of life insurance; the laws of Maine have incorporated in 
the policies a provision for a paid-up policy; we, therefore, wished 
the Legislature of Massachusetts to reaffirm the original law of 1861, 
which applied to those comp mies, and not to allow this exceedingly 
technical clause, in the law of 1872, to affect companies not organi¬ 
zed in that State, and which, if adhered to, would practically drive 
them out of the State ; I went to Boston and represented to the 
Committee on Insurance of the State ; I consulted with the Secre¬ 
tary of State and Mr. Bhodes, the Superintendent of Insurance, and 
Elizur Wright, also a superintendent of insurance, was consulted 
with, and they came before the committee and gave their views on 


358 


the matter; there was no opposition to the bill and those gentlemen 
indorsed it, and it was passed into a law without opposition, and 
signed by the Governor a few weeks ago. 


By Mr. Lang : 

Q. Wherein it concerns you was this: that by the construction 
put on the law of 3.872, it extended the act of 1861 to foreign in¬ 
surance companies ? A. Yes, and contrary to the wish of the Legisla¬ 
ture. 

Q. Well, I don’t know that you ought to say that? A. Well, I 
have a right, I say, to infer that, because when they found out how 
it worked they repealed it and reaffirmed the previous act. 

Q. Well, that was the legislation at Boston ? A. Yes, sir. 

Q. What was that at Harrisburg ? A. That at Harrisburg was 
about as follows: the State of Pennsylvania has for some years 
levied a tax of three per cent on the gross premiums of companies 
in other States doing business in that State; and I went and pre¬ 
sented a statement to the committee of the Legislature requesting a 
repeal of the bill; it is a very heavy burden to the policyholders. 

Q. Well, what was done ? A. The committee declined to report 
favorably for the repeal and nothing was done. 

Q. Was any one else engaged in that matter except yourself ? A.. 

Yes, sir; there was a gentleman by the name of E. A. Hollins, of 
Philadelphia, formerly commissioner of internal revenue of the 
United States; he had been largely interested in the insurance busi¬ 
ness, and he went up to Harrisburg and made a very impressive- 
statement before the committee. 

Q. How much was he paid for his services ? A. He was paid 
$250. 

Q. Was any one paid at Boston for services in legislation there ? 
A. Hot for those services alone. 

Q. Well, for those services in connection with other services? A. 
Nothing has been paid as yet, but Judge Foster, ex-judge of the 
Supreme Court of Massachusetts, was retained in that matter, and 
others in connection with other business, and he will charge fees, of 
course. 

Q. From the chamber? A. Yes, sir. 

Q. What amount you have not yet learned ? A. Ho. 

Q. The legislation in Canada, in Ottawa, was what ? A. The- 
legislation there was of this nature; the business of life insurance 
in Canada, for many years, has chiefly been conducted by the United 
States companies; last year a bill was introduced by the government 
requiring all life insurance companies not chartered by Canada—I 
mean companies organized in the United States and Great Britain— 
to deposit with the receiver.general a sum equal to the reinsurance 
reserve on all existing policies, and making divers other require¬ 
ments ; the companies of the United States, after conferring together 
agreed that if that requirement was made they would withdraw from 
Canada and divide their new business. I went to Ottawa to get a 


359 


modification of the bills, such as might be required for public inter¬ 
est, and finally, opposed before the Parliament, which I did before 
the committee of finance of the Ottawa parliament. 

Q. When was that? A. In 1876 ; a little over a year ago. 

Q. Did any one assist you in that ? A. I was only assisted by the 
agents of the company, who took part in it; several of them were at 
Ottawa, and took part in presenting the case to the committee. 

Q. Were their services rendered with or without pay ? A. .With¬ 
out pay. 

Q. You say you have no information in regard to the Universal 
reinsuring the Guardian ? A. I say I have no information, except 
what I have gathered from the public press in regard to it and casual 
conversations. 

Q. Have you any information as to how recently that was 
attempted ? A. That was four or five years ago, I think, and it was 
done, I think. 

Q. It was done how long ago ? A. I can't give you the date; 
well I think it was done not more than two years ago. 

Q. Was it not a matter of public notoriety that the Universal did 
reinsure the Guardian ? A. 1 think so. 

Q. And it was charged since, that very gross frauds were perpe¬ 
trated in the arrangement? A. Yes; I have seen such statements 
in the newspapers. 

Q. They have been quite public and quite frequent, have they not ? 
A. Oh, I have seen such charges and denials of them. 

Q. The Guardian has since failed, hasn’t it ? A. It has been put 
in the hands of a receiver within a few weeks. 

Q. Have you not heard that the Universal reinsured the North 
America ? A. I have heard that the Universal took a very large 
number of the policies of the company. 

Q. I don’t mean all of them, but took a considerable portion of 
the risks of the North America?* A. Yes, sir; I have no knowledge 
of these things except such as I gather from the public press and 
conversation ; I have no special knowledge. 

Q. When did you understand that matter of the North America 
to have been done ? A. I don’t remember whether it was before or 
after the Guardian. 

Q. It was about the same time? A. 1 think soon after. 

Q. When did you first hear of it ? A. I first heard of it through 
the public press. 

Q. When ? A. When it was announced by the papers. 

Q. When did you hear of the transaction of the North America ? 
A. In the same way. 

Q. Shortly after ? A. Shortly after. 

Q. It was quite extensively known that both of these transactions 
involved gross frauds on the part of the Universal, was it not ? A. I 
have heard such charges ; yes, sir. 

Q. You have heard a good many of them? A. Yes, sir; most of 
them I had seen was so utterly absurd that I didn’t give any cre¬ 
dence to them because the very nature of the frauds charged showed 
them to be impossible. 


360 


# 


Q. Did you have any connection with them? A. Utterly none. 

Q. Do you know of any one who had, or furnished any money ? 
A. I don’t know at all, except by rumor. 

Q. Is there any thing in the by-laws of the Chamber tf/Xife Insurance 
in regard to harmonizing difficulties of the insurance companies 
which are members ? A. I have the by-laws here, at your service ; 
no, sir; there is no allusion to that service at all. 

Q. Were you in any way connected with the arrangement or set¬ 
tlement between English and the Mutual? A. Not in any way, 
except in the way I ha/ce told you; I was consulted by the Mutual 
several times in regard to attacks in the paper upon them. 

Q. Have you any knowledge of the way it w^as settled afterwards ? 
A. I have none, except what I had at the time in confidential con¬ 
versations with the officers of the Mutual Life. 

%. For which you was paid as counsel ? A. I was paid by them 
for other things at the time, and was consulted by them prior on a 
great many points in regard to their business; there is no profes¬ 
sional confidence in the matter, if you wish to inquire about it. 

Q. What was the arrangement as to the settlement of that matter 
as far as you know or have any information ? A. The only in¬ 
formation I have was charged that a certain amount of money w T as 
paid to Stephen English for withdrawing his opposition; I went to 
the officers of the Mutual Life for the purpose of impressing upon 
them the utter impolicy, apart from impropriety, of such a payment, 
and was assured by Mr. Winston, on his honor, that no such pay¬ 
ment had been made, or would be made, and under no circumstances 
was such a settlement possible, that involved the payment of a dollar 
of his money. 

Q. Is there such an institution as the Mercantile Loan Associa¬ 
tion ? A. Yes, sir, the Mercantile Trust Company, I suppose you 
mean. 

Q. They have an office in the Equitable building? A. Yes, sir, I 
think that is the name of it. 

Q. Who are its officers ? A. I never have heard any thing about 
it; I have seen its published list of officers in its advertisements, but 
never took any notice of it. 

Q. Do you know from what sources its capital is derived? A. I 
do not. 

Q. You have no information ? A. None whatever. 

By Mr. Lang : 

Q. Has this association taken any action with regard to legislation 
at Albany this winter ? A. None whatever. 

Q. Taken no action with reference to it ? A. No. 

Q. Have there been any meetings since the organization of the 
Legislature in which bills were discussed? A. No, there has been 
no meeting since the session of the Legislature began. 

Q. There are no persons in the employ of your association or under 
its direction here to influence legislation ? A. None that I know 
of; there have been several visits to Albany made by persons, not 


361 


on behalf of the chamber, but representing the companies in their 
own interests. 

Q. There have been no persons here employed by you, you say ? 
A. No, sir. 

Q. Have you expressed any opinion, in writing or otherwise, to 
the companies with reference to the acts pending before the legisla¬ 
ture now ? A. Oh, yes, sir, frequently. 

Q. How have you expressed yourself, favorably or unfavorably to 
the measures now pending before the Legislature? A. Well, I have 
been consulted at'various times as to what the effect of the proposed 
measures would be on the companies, and have in every case con¬ 
sidered it very carefully before giving an answer. 

Q. Have you given any opinion on the bill now reported by this 
committee ? A. Yes, I had occasion to consider it a few weeks ago 
very carefully. 

Q. I mean the bill as it came to the Legislature reported by this 
committee ? A. The bill as reported by the committee I allude to. 

Q. We have been very liberal in inviting men to give their opin¬ 
ion on subjects presented to us, and there are two or three questions 
I have asked other men before on the stand, when I was here, and I 
would like to ask you the same; one is, from your experience in 
life insurance is it safe, or whether in your opinion as a life insur¬ 
ance man, and supposed to be acquainted with the business, there 
should not be legislative checks put upon the holding by one person 
of different positions in different life insurance companies, or in 
life, tire or marine companies? A. I think I understand what you 
mean. 

Q. I mean whether there are not great evils growing out of 
men being secretary of one insurance company and president of 
another and general agent of another, and so on, and sustaining 
various relations to various companies at the same time; whether 
it does not afford opportunity for frauds to be perpetrated on 
the policyholders ? A. I never considered the question exactly 
in that light; my attention was called in regard to the provisions 
proposed by the Legislature, and to the propriety of legislation 
which should directly prevent any loans or any transfers of any kind 
of securities, or complication of accounts of any kind between the 
companies. 

Q. I do not care to have you tell us what I didn’t ask you about; 
it appeared here, on the examination of one man, that he was vice- 

S resident of one company, and that he was general agent of the 
[utual Life at Boston, that he didn’t do the business, but another 
man did it, and that he drew $10,000 or $12,000 in that capacity in 
Boston, but another man did the work in Boston, who was his father ; 
his father died and another man was put in his place, and he receives 
the commission, while the other man did the work; the other man 
while acting as agent of the Mutual Life in Boston, was in fact the 
agent of the company of which the other and general agent was the 
vice-president; do you understand what I mean? A. Well, will 
you allow mo to state the facts in regard to that matter; I think you 
refer to the case of H. H. Hyde; he spent his life as the agent of 


362 


the Mutual Life in Boston, and he made a very large number of con- 
tracts-with the Mutual Life, for which his commission was on the 
renewals made to be paid hereafter; he was not the agent for new 
policies, and Mr. Hyde, the vice-president of the Equitable, never 
was the agent for any new business, but simply took the collection of 
the commissions his father was entitled to under the contracts made 
during his lifetime. 

Q. Well, I want your views of it; to me it is apparent that a man 
should not sustain these two relations, for it only wants a man with 
common honesty to know that? A. I think the relations you men¬ 
tion are not possible; there will be no doubt of the answer any one 
will give to such a question as that; but as I understand it, my im¬ 
pression is the statement 1 have made is strictly correct. 

Q. I ask you whether, in your judgment, there should not be legis¬ 
lative checks put upon the holding by one person of different offices 
in different companies, either life or tire; whether the man may be 
an officer in one company and an officer in another? A. You ask 
my opinion ? 

Q. Yes ? A. Well, I say I am a thorough-going free-trader, and 
dislike legislative checks of any sort placed upon it. 

Q. You think it would be unwise for legislative checks to be put 
upon a man being an officer of one company, say vice-president of 
one company and general agent of another, and secretary of another, 
and so on ? A. Well, I think it should be prevented, but I do not 
think legislation will prevent it; it seems to me that the immediate 
detection and summary punishment of fraud should be procured by 
legislative enactment; I think it would be more effective to make 
any manager of a life insurance company who would be guilty of 
embezzlement or misappropriation of funds, leaving a deficiency in 
the funds—I don’t mean in the reserve, but in the funds—to make 
him personally liable in an action for the recovery of the money. 

Q. In your experience as an insurance man, do you think that 
legislation can be safely entered upon which shall provide against 
non-forfeiture of policies in the sense of which we understand the 
term—that if a man fails to pay, no matter if he has paid ten or a 
dozen payments, that all legal claim upon the company for any thing 
arising from the policy is lost; do you not think that we can safely 
legislate that the companies shall, in future, insert a provision of 
that kind, if you please. Some of them say, “ we do this; we, in 
the goodness of our heart, as insurance men say, if a man comes in 
and asks us for a paid-up policy, we give it to him at oncewhen 
the question is put to them, “are you bound to give him any 
thing ?” they say, “ nowhen they are asked if you are under 
obligation to do it they say “ noif the question is put to them, 
“ do your policies bind you to do it ?” they say “ noif they are 
asked, “ can he compel you to do it ?” they say, “ no; but we think 
it a matter of policy to do itnow the question I want to get at 
is this: my idea is whether a man had better be a beggar, or come 
in and demand what he is entitled to; or, in other words, if there 
should be any legislation which will require a clause to be put in the 
policy to give him that right ? A. It is nonsense that a man should 


'I 


363 

left to ask as a favor any thing that is equitably his right in the 
matter. 

Q. Have you considered the Maine bill ? A. I have. 

Q. Does that impress you as the correct principle ? A. Ho, sir, it 
does not. 

Q. How about the Massachusetts ? A. It does not; it is univer¬ 
sally admitted in Massachusetts, and it was in the discussion before 
the committee agreed, that the bill required amending, but the time 
for amending it had not come, because no substantial agreement had 
been reached by those whose interest it was to have it changed. 

Q. Have you considered that section in the bill which came from 
this committee and reported to the Legislature? A. I have. 

Q. What is your judgment of that? A. It is incomparably the 
nearest approach to an equitable and just settlement of the whole 
matter that has yet been proposed. 

Q. Do you think the practical effect of the propositions in the 
present bill before the Legislature will be beneficial to the policy¬ 
holders ? A. I have been consulted about that provision more than 
any other; several men have come to me in alarm and asked whether 
the Legislature is going to pass that, and whether it would not be 
the ruin of their business; my answer has been it is right, and you 
should be bound by it. 

Q. Xou understand it embodies the principle set down by the 
United States Supreme Court? A. Precisely; you have made it 
equitable; the distinction between your bill and the Maine and Mas¬ 
sachusetts bill, is this—the value of the insurance by the Maine and 
Massachusetts, is estimated by a fanciful rule altogether; that by 
vour rule is estimated on the contract as it exists; you say that which 
is executed shall be perpetuated ; and that which is not executed 
shall cease; that is the way people do in all business, and it is 
just; you take the Massachusetts law, and let a man pay twenty-five 
annual premiums and be unable to pay more—what is the result? 
if he has the misfortune to live twenty years more he gets absolutely 
nothing for his policy; because, under the Massachusetts law, the 
premiums, with compound interest each year, are to be deducted 
from the amount he has actually paid; the result is the amount of 
his insurance goes on getting less and less, and if he lives long 
enough he gets nothing; this proposition of yours gives a higher 
surrender value than has ever been made yet; but it does not give 
more than is actually just, or that a company has actually received 
value for; I see nothing in your bill which is not just and equitable. 

Q. I will ask you one more question: you have no knowledge or 
information, then, that the Chamber of Life Insurance has, directly 
or indirectly, taken any action with reference to, or sought to influ¬ 
ence the action of, the Legislature upon the bill now before the As¬ 
sembly? A. Ho, not in the slightest degree; except by publications 
addressed to the people; I have myself talked to members of the 
press with reference to the bill, and I will state one general fact in 
regard to it, which I should like the committee to understand; when 
the Chamber of Life Insurance was formed there were stories about 
enormous expenditures being made for legislation at Albany, and 


364 


the companies were expected to contribute funds; it was distinctly 
understood and agreed at the formation of the chamber that, while 
we should endeavor to enlighten public opinion and influence wise 
legislation, under no circumstances was a dollar of money to be paid 
out with any doubt about the legitimacy and propriety of the purpose 
for which it was expended. 

Q. Well, that must be left for the managing agent to determine? 
A. Yes, sir. 

Q. And if, in the opinion of the managing agent, it is damaging 
to the interests of the company, is action taken ? A. He takes 
action in the way I have specified. 

Q. You don’t mean to say this association was formed in the 
interest of the policyholder, do you ? A. Exclusively. 

Q. Did they form it? A. Ho, sir. 

Q. Did they petition for it ? A. Ho, sir. 

Q. Did they consent to the formation of it ? A. I don’t know 
that they were ever consulted. 

Q. Who conceived the idea of it ? A. 1 guess it arose out of 
the ordinary business transactions of every day , when it was found 
necessary to have some means of conference so as to promote the in¬ 
terests, and raise the tone of lye insurance. 

By Mr. Moak : % 

Q. Do you think it raised the tone of that association to have the 
Universal in it? A. I think the tone of the Universal was raised by 
it; our total assets for 1876 were $31,600; of that we paid $2,280 
for office rent, lighting, heating, etc., and we have employed several 
experts in collecting the mortality statistics on selected lives in the 
United States , and preparing a mortality table , which in scientific 
results and value will be altogether beyond anything the world has 
ever seen. Every American company contributes to it. It has been 
poing on for two years , and costs us $766 a month; for the wages 
of mathematicians and experts, last year we paid $2,500 for it; that 
is a work upon which th^ reputation of the chamber will depend; 
we are also collecting a library of life insurance which is open to 
all, and also a complete library of the literature connected with life 
insurance from the beginning to the present time; that is open to 
the public also, not only to life companies but to actuaries and 
students, and whoever choose to come and study there. 

Q. Do you mean that as a fact, that it is a right guaranteed by 
the articles of association ? A. Well, that is a fact. 

Q. If you say that you are collecting a library at the expense of 
the insurance companies, which is open to the public and any one, 
what do you mean; do you mean they are at liberty to come in and 
consult it ? A. Certainly. 

Q. Is that right guaranteed to the public? A. Ho ; we are not a 
corporation. 

Q. I don’t know about that; it seems you are a very closecom- 
munion corporation to me? A. We are simply an association. 

Adjourned. 


365 



Tuesday, April 3. 


\ 

The committee met Tuesday, April third, at three o’clock, p. m. 


Present—Hon. E. C. Cowdin, in the chair; Messrs. Floyd-Jones, 
Coulter, Moody, Husted, Skinner, Weiant, and Lang. 


The Chairman— Before proceeding to business, I wish to make 
a single remark ; it is well known we have devoted a great deal of 
time to investigate matters connected with life insurance; we have 
had before us most of the leading gentlemen connected with the 
various companies, and have had full and complete testimony from 
them; we have received numerous communications, many of them 
anonymous, most of them of no great value, inasmuch as they were 
devoted to denouncing the companies and their officers. 

t 


Mr. Weiant— You mean individual members have received such 
letters ? 

The Chairman —Yes, there is hardly a member of this commit¬ 
tee but has received letters of a denunciatory character, very few 
containing any suggestion on which to base practical legislation, or 
which will aid the committee in arriving at a just decision upon the 
matters about which there is so much complaint; it w r ould be useless 
for me to speak of the bad management which we have ascertained 
in connection with many of the companies that have failed; the 
country is very much exercised about it, and justly so ; at the same 
time I think I speak the sentiments of the committee when I say 
there is no desire on the part of the committee to unnecessarily alarm 
policyholders at the present time, and to give them to understand 
that their money has been thrown away wherever invested; we still 
have implicit confidence in many companies existing, and while I 
say this I desire in the examination that shall go on hereafter, so far 
as 1 have control over it, that we shall confine ourselves strictly to 
life insurance, and not wander off and consume as much time as we 
fyave in times past with matters not directly connected with the sub¬ 
ject immediately under discussion. 

Mr. Skinner —In direct connection with what you are saying, 
Mr. Chairman, I have a letter which I have received to-day from 


366 


the representative of an insurance company which I would like to 
have read to the committee; it is as follows: 

Phcenix Mutual Life Insurance Company, 

Hartford, Conn. 

• Watertown, N. Y., Ajryril 2, 1877. 

Hon. C. R. Skinner : 

Dear Sir —While the Legislature are looking with great care 
after the regular life insurance business, and seeking to secure the 
policyholders in their various companies, the State is being flooded 
with the lodges of a society calling itself the Ancient Order of 
United Workmen, and which pretends to furnish to its members 
cheap insurance by means of assessments levied upon each other in 
case of death. It is needless for me to point out to you the obvious 
objections to this delusive system more than to say that it has no 
guarantees either of law or of honor to preserve it; that even after 
having paid for years, there is no certainty of the members receiving 
any fixed amount, and that there is little or no restraint upon the 
officers, who may assess upon made up claims; that, in fact, it 
lacks all the essential elements of security and certainty so mu ch 
needed in the hour of calamity. Some law should be passed making 
all companies, societies, or associations which claim to insure lives, 
or to pay any amounts upon the death of individuals, to keep a cer¬ 
tain reserve fixed by the table as a security, and also making them 
report to the State department as the life companies do. < 

It is just now so easy, while there is so much distrust, for these 
quack affairs to get the ear of the people, and they are improving 
the opportunity, and will, unless some protection by law is thrown 
around them, rob the citizens of this State of large amounts of 
money. Please see if something cannot be done to afford security 
in this direction. 

Yours very truly, 

HENRY S. MUNSON. 

Mr. Skinner —This matter I would like to have the committee 
take into consideration. I know people in some parts of the State 
have been robbed by these companies. 

Mr. Weiant— Afri I correct, Mr. Chairman, in understanding 
you to state that the examination has been diverted into matters 
that do not belong to the examination now pending before the 
committee ? 

The Chairman— I think we have devoted a good deal of time to 
matters irrelevant. 

Mr. Weiant —As a member of the committee, I think not; I 
don’t want you to put me in the position of acknowledging that. 


367 


James M. Freeman, recalled : 


Examined by Mr. Moak: 

Q* When you were here before you were understood to say that 
neither you nor your father, nor any other officer of your company 
had any connection with any other corporation; do you desire to 
make any qualification to that answer? A. Yes, sir, I do. 

Q. Well, suppose you make it? A. When I got back from New 
\ ork, I saw in the paper a synopsis of my testimony in the morning, 
and I noticed there was several misstatements and inaccuracies in it, 
and I intended to come right back to Albany and correct them; I 
was taken sick and was confined to my bed until Monday, and in 
order to ha ve my testimony accurate, I gave instructions to the book¬ 
keeper to go over the testimony carefully and draw up the facts, and 
I intended to come back that afternoon ; while the book-keeper was 
doing it, I received a subpoena from the State to appear here to-day, 
but I should have come without it. 

Q. Do you desire to make a modification of it? A. Yes, it was 
partly wrong. 

Q. What modification do you wish to make? A. I understood 
your question to apply to insurance companies solely, and my mind 
was on that fact; the president of the Globe Insurance Company is 
also president of the railroad company. 

Q. What is its name ? A. The Long Island City Shore Railroad. 

Q. The Secretary of the Globe is also secretary of it, isn’t he ? A. 
Ti •easurer. 

Q. Where is that railroad ? A. In Long Island city. 

Q. Is it a horse railroad ? A. Yes, sir; and runs from Hunter’s 
Point to Astoria, and from there to Bower Bay. 

Q. What was the capital stock of the railroad ? A. Seventy-five 
thousand dollars. 

Q. Was it all paid in ? A. Yes, sir. 

Q. In money ? A. No : not all in money. 

Q. How much in money ? A. When we took hold of it, there was 
$20,000 odd of the stock that was in the hands of other parties; 
before commencing to run they had got into difficulty and did not 
carry it out; a party came to me and asked me to take hold of it. 

Q. Can’t you tell us how much of the $75,000 was paid in in 
money ; as treasurer of the company you ought to know? A. I will 
have to make an explanation ; there was about $50,000 worth of 
stock not paid in, and the other $20,000 I don’t think was paid; 
although $20,000 was issued I don’t think a penny of it was paid in ; 
of that $50,000 it was paid in this way ; it was issued to the contractor 
with bonds for building the road, and I don’t think there was any 
money paid in directly on the stock of either the $50,000 or $25,000. 

Q. If you issued stock to the contractor and bonds as well, were 
the stock and bonds both had out at the same date ? A. \ es, sir ; 
the road was built and it was paid part bonds and part stock. 

Q. Well, how much stock was issued to the contractors? A. 
There is about $20,000; I think they had the remainder, $40,000. 




368 


Q. They were paid $20,000 ? A. I think they had about $45,000; 
and there was $20,000 more which would make $65,000. 

Q. Who had $45,000 ? A. The contractors ; understand me there 
was $20,000 that in some way was issued when I went in. 

Q. In addition to that there was $45,000 issued to the contractors ? 
A.. I es sir. 

Q. Well, that makes $65,000? A. Yes, sir; the other $10,000 
was issued—I think the other $10,000 was issued to the president 
and myself without the payment of a penny. 

Q. Without the payment of any thing ? A. Yes, sir. 

Q. This $45,000 issued to the contractor, how much was the debt 
upon which they took the $45,000 in stock * A. For the grading and 
building of the road that was made. 

Q. Can’t you answer my question; the company owed the con¬ 
tractors something, and for that they gave them $45,000 in stocks ? 
A. We owed them for building live miles of the railroad. 

Q. Have you the capacity to tell how much in dollars and cents 
the company owed the contractors? A. I don’t think it was a money 
contract at all; they agreed to pay them so much in stock and bonds 
for building the railroad. 

Q. They agreed to pay $45,000 in stock then ? A. Yes, sir. 

Q. And how much in bonds ? A. Well, it is rather embarassing 
for me to answer the question because the road is being continually 
enlarged all the while; it is being built, and built, and built. 

Q. I suppose some time you delivered the stock? A. Yes, sir. 

Q. And at the same time you delivered the bonds ? A. Yes, sir. 

Q. Can’t you tell us how much the contractors got under the same 
contract? A. I should think $50,000 or $60,000 worth of bonds. 

Q. Can’t you come within $10,000 worth ? A. I should think it 
was $50,000. 

Q How much was the cost of the road, calling the bonds par, 
and the stock par? A- Well, the cost of the road was something 
over $100,000. 

Q. How does it happen then that your company loaned the rail¬ 
road company $73,000 upon $100,000 of its bonds ? A. They loaned 
them first $50,000, and then more ; a double track was laid, and then 
they extended the road two miles further up to Bower Bay, which 
was not in the original contract at all; then more bonds were issued, 
and the company then advanced, I think it was $15,000 more ; no 
$10,000 more, and then they advanced $15,000 more. 

Q. That makes $75,000 you advanced them ? A. To the company, 
yes, sir; .well, then, after that there was continual additions 
going on, buying of cars, buying of horses, and laying the track 
and grading, such as is necessary in a new railroad, and more money 
was going out all the while, and there is more money going out now; 
there is five miles more being built, but no more money being 
advanced by the company. 

Q. How many miles of railroad do the bonds cover ? A. They 
cover the whole franchise. 


309 


Q. At the time you issued the bonds you only had a certain fran¬ 
chise ; did you ; it would not cover all you got after, would it ? A. 
Yes, sir ; it would. 

Q. How long was the railroad when you issued the bonds? A. A 
double track for three miles and a single track for two. 

Q. What was the entire cost of the double and single track for the 
live miles ? A. Over $100,000 ; $108,000, I think it was. 

Q. I don’t see how you figure it; the company issued $45,000 in 
stock ? A. Yes, sir. 

Q. You did not loan on that stock ? A. No, sir. 

Q. Consequently there was but $55,000 worth of bonds? A. Yes. 
Q. Those you issued to the contractor, and then the insurance com¬ 
pany bought them ? A. No, I had some of the bonds myself; 1 
owned some, and flien I borrowed from the company on $10,000 or 
$15,000 of the bonds individually. 

Q. You bought some of the bonds? A. Yes, sir. 

Q. How much did you pay for them ? A. Some of them stood 
me in at par; and some of them, I think seventy of them, I sold at 
par : the others came to me at eighty. 

Q. Came to you at eighty? A. Yes, at eighty cents on the 
dollar. 

Q. How much did you borrow of the company ? A. I think it 
was seventy cents. 

Q. How much were the bonds each ? A. I think $1,000 each. 

Q. How many did you have that you hypothecated to the com¬ 
pany? A. Sixteen thousand seven hundred dollars worth. 

Q. You hypothecated bonds, amounting on their face to how 
much? A. 1 borrowed $16,723, on $24,000 worth of bonds. 

Q. You hypothecated $24,000 worth of the bonds of the railroad 
company? A. Yes, sir. 

Q. To the Globe Insurance Company? A. Yes, sir. 

Q, For how much ? A. Sixteen thousand seven hundred and 
twenty-three dollars. 

Q. At what per cent was that, of the par value of the bonds ? A. 
About seventy; I got seventy. 

Q. How much did those bonds cost you, did you say ? A. Some 
of them 1 took at par, some others I took at eighty. 

Q. How did you pay for them ? A. I paid for them in cash. 

Q. All of them? A. Yes, sir. 

Q. You received none of them except by purchase? A. Not any. 

Q. Well, that makes $16,000; where did the balance of them 
your company held come from ? A. There was seventeen of them 
sold to Mr. Steinway. 

Q. By whom? A. By the company. 

Q. For how much ? A. Seventeen thousand dollars. 

Q. They are sold at par, then ? A. Yes, sir. 

Q. Those were pledged to your company for a loan? A. No, sir ; 
he has them now. 

Q. I am trying to find out where your company got $73,000 
worth of the bonds; you pledged to that company bonds that cost 


24 


370 


tliem $16,000; now where did they get the balance of w’hat cost 
them $73,000 in all? A. We have loaned in all $76,723. 

Q. On the bonds of the company? A. On one hundred and 
seven of the Long Island City Shore Railroad bonds; the total bonds 
issued by the company is 135, of which the Globe holds as collateral, 
107; Mr. Steinway has seventeen and I have eleven now, making- 
135 altogether. 

Q. Can’t you tell us where your company got the balance of the 
bonds which cost you, in all, $76,000? A. Yes ; sir; there were two 
loans made to the contractor; the first loan was $50,000. 

Q, The first loan was $50,000 ? A. Yes, sir. 

Q. What did the contractor give you as collateral ? A. He gave 
us the bonds. 

Q How much? A. At seventy cents on the dollar; all the 
loans made have been at seventy cents on the dollar; then after 
that he built the Bower Bay branch, of which I was speaking, two 
miles in length; and he borrowed, I think it was, $16,000 more— 
no, $10,000 more; then I went to work and did some building my¬ 
self, and the company issued me some bonds, and 1 borrowed some 
money from the insurance company. 

Q. How much did you borrow ? A. Sixteen thousand dollars. 

Q. Then you have occupied this complex position; you have been 
its treasurer, and been its constructor, and loaned yourself money on 
your own bond ? A. I got the consent of the finance committee. 

Q. That is the way the thing is mixed up, is it not ? A. Yes, 
sir. 

Q. How much had you? A. I had just about that amount, 
$23,000 worth. * 

Q. You took the bonds at their face? A. Ho, at eighty cents. 

Q. And you pledged them for seventy cents? A. Yes, sir. 

Q. Does the company hold your personal obligation for the 
amount loaned on the shares as well as the bonds? A. Yes, sir. 

Q. How is it as to the contractors? A. Yes, sir. 

Q. Who was the contractor? A. World A Co. 

Q. Are they responsible ? A. Yes, sir. 

Q. To what extsnt from common reputation? A. I should think 
they were very responsible parties. 

Q. To what extent, whether simply just above water, or away 
above? A. Well, I should say the eldest was worth $50,000 to 
$75,000, easily. 

Q. How much is the entire length of the road, the piece you built, 
and the piece the others built ? A. The first piece -was three miles 
single, and was then laid double; that is six miles. 

Q. The short of that is, you have double track three miles long ? 
A. Y es, and a single track two miles long; and then we commenced 
last year—in August, I think it was—to lay another track, and 
those bonds of the company’s that were issued by the Long Island 
City Shore Railroad Company covered the whole franchise. 

Q. What is the new piece to be—the one you have commenced ? 
A. It is going to run from the ferry back into Dutch Kills; that is 
a mile of double track and a mile and a half of single track, the mile 


\ 


371 


in Thompson avenue being built now; I will go on and say that the 
last investments have been made by the president of the company, 
Pliny Freeman, and myself out of our ovm pockets. 

Q. How much of the new part that is three miles long as you say, 
is now built? A. It is all built. 

Q. The whole of it? A. Yes. 

Q. From what you call the ferry to Dutch Kills? A. Yes; it is 
all built; there is about three-quarters of a mile on Thompson ave¬ 
nue, and about 3,000 feet more to build; that they were going to 
build yesterday. 

Q. Where do you reside? A. Ravenswood, Long Island. 

Q. On this railroad? A. Yes, sir. 

Q. About what portion of it ? A. In the center; the main rail¬ 
road runs from Astoria to Hunter’s Point, and Ravenswood is about 
in the center. 

Q. Where does your father live? A. In Ravenswood. 

Q. Do you and your father own a considerable portion of the real 
estate there ? A. He owns considerable ; I own ten acres. 

Q. How long has he owned a considerable portion of it ? A. Well, 
about ten or twelve years, I think. 

Q. How old is your father? A. He was born in 1798 ; he is nearly 
eighty years old. 

Q. What is the market value of the bonds in the company to-day? 
A. I don’t think any has ever been offered for sale. 

By Mr. Moody : 

Q. Have they no marketable value? A. Yes, sir; I would give 
ninety cents on the dollar for any now. 

Q. Flave they a marketable value if put on the market ? A Ho, 
sir; there never has been any offered for sale, to my knowledge. 

By Mr. Moak : 

Q. When were those bonds taken by your company ? A. They 
were taken after the first of the track was built between Astoria 
and Hunter’s Point. 

Q. Well, if you will, tell me what year that was ? A. In 1874. 

Q. How much of them were taken about that time ? A. Fifty 
thousand dollars, I think it was. 

Q. Has any interest been paid upon those bonds ? A. Do you 
mean has the company ever received interest. 

Q. I mean has the railroad company paid the interest on its 
bonds ? A. Ho, sir ; they have not. 

Q. When was the interest payable by the terms of the bonds ? A. 
Twice a year, semi-annually. 

Q. Have they as yet paid any interest? A. Ho, sir. 

Q. Has the interest upon the loans made to those parties on these 
bonds, pledged as security, been paid ? A. Yes, sir. 

Q. By whom ? A. The loan I borrowed has been paid by me, and 
the World Company’s loan has been paid by them. 

* Q. All the interest has been paid up to the present time ? A. 
Every penny of it. 


/ 


372 


Q. Up to the present time? A. Yes, sir. 

Q. What were the receipts of the railroad company ? A. About 

$ 21 , 000 . 

Q. And what were the expenditures ? A. Speaking from memory, 
I think it was $17,000 ; we took in that unnecessary expenditures 
such as are always met with on a new road. 

Q. The entire receipts of the railroad company for the year, we 
will say, were between $20,000 and $21,000? A. Yes; very near 
$ 21 , 000 . 

Q. And the entire disbursements of the company were over 
$27,000, you say. A. Yes,, sir. 

Q. Is that all the money loaned by your company upon railroad 
bonds? A. No, sir. 

Q. What other railroad bonds has your company loaned money 
upon? A. It loaned to John Yan Nest $8,000; it loaned him 
$16,000, and $8,000 was paid off; it now stands at $8,000 on 
$32,000 worth of the New York, West Shore and Chicago railroad 
first mortgage bonds. 

Q. Is not that the railroad that never was built? A. Yes, sir; it 
never was built; I don’t think it is worth ten cents on the dollar. 

Q. Then you have loaned $16,000 upon the bonds of a railroad 
company that not one single mile of it has ever been built ? A. I 
know very little about that; the loan was made some years ago. 

Q. How long ago ? A. I guess the loan has been made seven or 
eight years, perhaps. 

Q. Has anything been paid upon those bonds ? A. This loan was 
made to another party ; to Mr. Yan Nest. 

Q. Has anything been paid upon those bonds, I ask you ? A. No ; 
I don’t think the interest has been paid upon them ; and 1 don’t 
think the bonds are worth the paper they are written upon. 

Q. Mr. Yan Nest is one of the finance committee? A, Yes, sir. 

Q. Is he a responsible man ? A. He is reputed to be a wealthy man. 

Q. Why has not the company required him to pay them ? A. 
He has 


By Mr. Husted : 

Q. He has paid $8,000 off ? A. Yes, sir. 

Q. And $8,000 is due ? A. Yes, sir. 

Q. Has he paid the interest regularly ? A. Yes, sir. 

Q. And these bonds are secured by bis personal obligation ? A. 
Yes, sir; but if he should die I think the company would lose every 
penny. 

Q. Has he no estate? A. Yes, sir. 

Q. How are they secured ? A. By his note. 

Q. Then you don’t think his note is good for any thing ? A. 
Well, I don’t think much of any one’s note. 

By Mr. Moak : 

Q. Why do you say his note will not be paid? A. Well, I with¬ 
draw that statement. 


3T3 


Q. Has yourYompany loaned any other money or railroad bonds 
or stocks ? A. Yes, we have loaned on lire insurance stock. 

Q. On railroad stocks, I mean ? A. Not to my knowledge; we 
had some before that, but we have none now ; I don’t know of any 
being loaned. 

Q. Has it loaned any upon stock; you say it h^s upon stocks ; in 
every case has it received the amount of the loans? A. Yes, sir. 

Q. The amount of the loans has been paid in full? A. Yes, sir; 
we never lost a penny on what we call demand loans, unless we lose 
on the $8,000. 

Q. That is the only doubtful loan there is ? A. The onlv one I 
think doubtful. 

Q. And that is secured by Mr. Van Nest’s paper? A. Yes ; but 
independent of that I don’t think the bonds are worth much. 

Q. \ ou have loaned upon stock of lire insurance companies ? A. 
Yes, sir. 

Q. Upon what is that loaned? A. The company has loaned me 
$10,700 on 120 shares of Home Fire stock. 

Q. The Home of New York? A. Yes, sir. 

Q. How much was that bought at ? A. One hundred dollars. 

By Mr. Husted : 

Q. What is the market value of the Home stock to-day ? j A. One 
hundred and fifteen dollars, I believe; $112 to $115. 

By Mr. Moak : 

Q. Have they loaned any thing upon any other fire insurance 
stock ? A. No, sir. 

Q. Was your father, or any other officer of the Globe Insurance 
Company, connected with any other company or corporation of any 
kind? A. Yes, sir; my father is one of the original incorporators 
of the Greenwood Cemetery; he is one of the directors in it now. 

Q. Any other? A. Yes, sir; he is one of the directors in the new 
Brooklyn bridge that will pass over Blackwell’s Island, if it is ever 
built. 

Q. Any other ? A. If you had asked me that question a week 
go I should say no, but I now say yes. 

Q. What? A. Of a gas company which has never gone into 
existence; I did not know of it, but some one called upon me the 
other day to pay sixteen dollars on his account. 

Q. It is not very important, unless you loaned something on it? 
A. No, sir; those are the three corporations that he is connected 
with. 

Q. Is he connected with any other? A. No, sir; not to my 
knowledge. 

Q. Are you ? A. I am not. 

Q. Is any of the other officers of your company? A. Yes; 
William Sturgiss is a director in the Home Fire Insurance Company 
iind a director in the Atlantic Marine Insurance Company. 


* 

374 

By the Chairman : 

, Q. Is he a paid officer? A. No, sir. 

Q. Then he does not, necessarily, require to give his time to that 
company, or any company other than your own ? A. No ; I propose 
to answer the question squarely; that is, where I know. 

By Mr. Moak : 

Q. Is he your brother-in-law ? A. No, sir. 

Q. Did not your father marry a lady by that name? A. Yes r 
sir. 

Q. Well, is he related to you in anyway, this gentleman ? A. 
No, sir. 

Q. This brother-in-law of yours, what is his name ? A. Hopkins. 

Q. Have you not a brother-in-law by the name of Sturgiss ? A, 
No; this Mr. Sturgiss is no relation to me; my father married his 
daughter. 

Q. This Mr. Sturgiss, that your father married his daughter, is lie 
in the employ of the company ? A. This is the gentleman that I 
was speaking about on my direct-examination. 

Q. Is he in the employ of the Globe company ? A. Yes, sir. 

Q. At a salary? A. Yes, sir. 

Q. How much? A. Four thousand dollars. 

Q. Is that all? Yes, sir. 

Q. Does he not receive a commission besides ? A. He does not. 

Q. What position does he occupy? A. He is managing director 
of agencies. 

Q. You say he is a director in fire insurance companies? A. Yes; 
in the Home and Atlantic Marine. 

Q. Is he in the employ of either of those companies ? A. No, 
sir. 

Q. Does he receive any compensation? A. Not to my know¬ 
ledge ; he is in the Globe office all the while, attending to the 
agencies. 

Q. Have you a brother South ? A. No, sir. 

Q. How many brothers have you ? A. One. 

Q. Where is he ? A. In London. 

Q. Is he in the employ of the Globe? A. No, sir. 

Q. Does he receive any compensation from the Globe ? A. No, 
sir. 

Q. Have you any other relatives in the company ? A. The cashier 
of the company married my sister. 

Q. The cashier of the Globe? A. Yes, sir. 

Q. What salary does he receive? A. Three thousand five hun¬ 
dred dollars. 

Q. Is that his only business ? A. It is his only business. 

Q. How long has he been employed by the company? A. About 
three years. 

Q. What was his business previous to that ? A. That of a clergy¬ 
man. 

Q. Are his duties at the home office ? A. Entirely; he is very 
lame and could not carry out the duties of a clergyman. 


375 

i 

Q. Where does he reside ? A. He lives in Ravenswood. 

Q. Has not your brother in Europe been at all in the pay of the 
company there? A. Ho, sir. 

Q. Hor on commission? A. Yes, sir, he was on commission some 
time ago. 

Q. How long ago? A. About eighteen months ago; he was on 
commission for one year. 

Q. For one year only ? A. That is all. 

Q. How much was his compensation? A. Nothing but a com¬ 
mission. 

Q* How much did it amount to ? A. Thirty-live per cent, I think, 
and ten renewals at seven and a-half per cent. 

Q. And for what section of Europe was he agent for the com¬ 
pany ? A. For England alone. 

Q. Can you tell how many policies were secured by him in the 
company during the year? A. I really don’t know ; I should guess 
about 300. 

Q. Averaging how much premium? A. About $200 each policy. 

Q. Well, how much premium ? A. Well, that would depend upon 
each policy; I suppose each would average fifty dollars; no, I don’t 
think it would come up to as much as that; forty-live dollars gold ; 
that would be gold you know. 

Q. Was that the only time that he has been in the employ of the 
company? A. Yes, sir. 

Q. When did he cease that ? A. He lias not actually ceased, but 
has not done any business for six months. 

Q. What do you mean by that ? H. He has not sent any new 
business over ; if lie does no business he gets no compensation. 

Q, He is still agent, is he not ? A. Nominally. 

Q. Has he been at any time agent for any other territory ? A. 
\ es and no; he was appointed some years ago for Canada and 
accepted the appointment and remained there about two months and 
resigned and went to Europe. 

Q. Did he do any business there ? A. No; he did no business. 

Q. Has he been in the employ of the company in other ways ? A. 
yes, sir. 

Q. Has he received any thing from the company in the last live 
years, except in the way you have spoken of as agent ? A. No, sir. 

Q. Have you received from the company or its assets, directly or 
indirectly, any sum other than the sum you stated in your last exam¬ 
ination ? A. No, sir. 

Q. Did you not receive $24-,000 in one year, $14,000 in one item 
and $10,000 in another? A. Yes, sir. 

Q. What was your salary ? A.. In 1872, for 1871, the salary of 

the president and myself, was $39,298. 

Q. Separate them please ? A. It was divided in half. 

Q. That was the commission on every thing ? A. No, I beg your 
pardon, that was exclusive of my salary; my salary was then $1,500. 

Q. Give the whole amount both of you received, commissions and 
every thing ? A. My salary was $1,500 and his was $2,500; $43,000 
in 1872 we received for both. 


376 


Q. You mean each of you received §19,500 for commissions ? A. 
Y es sir. 

Q. Well, in 1873? A. In 1873 both of us received §28,000. 

Q. That is bonus ? A. Commissions, yes, sir. 

Q. Do you mean §28,000 each ? A. No, sir; §28,000 for both. 

By the Chairman : 

Q. Will you state clearly and exactly in your own way how much 
you received from 1871, to the present time ? A. In 1873, §28,500 
for Pliny Freeman and myself; of which he received two-thirds and 
I one-third; my compensation during that year was cut down from 
two to one per cent; prior to that it was the same as the president. 

Q. During that time you each received a salary ? A. 1 es; this is 
a commission upon the regular salary. 

By Mr. Husted : 

Q. You mean in addition ? A. Yes ; in 1874, §27,800. 

Q. Commission? A. Yes, sir; for both; two-thirds for him, and 
one-third for me; in 1875, §20,081. 

Q. For both ? A. Yes ; this is all for both ; in 1876 it was what I 
have given you. 

Q. In each of those years you received how much salary ? A. 
Two thousand five hundred dollars; it was in 1873 that they cut my 
commission down from two to one per cent, and they increased my 
salary from §1,500 to §2,500. 

Q. How much was the president's salary raised to ? A. His was 
kept at §2,500 ; it has always been the same since the time the com¬ 
pany organized. 

Q. Have you got there the investments of all your assets at the 
present time ? A. No, sir. 

Q. Can you state to us how much is invested on real estate? A. 
Yes, sir, I can ; a great many inquiries were made of me and I had 
the assistant make up the statement; bonds and mortgages, and the 
interest was paid up closer than ever before, amount to §1,616,085.35, 
additionally secured by §900,000 fire insurance, the policies being 
assigned to the company as collateral; about §862,000 of mortgages 
all in New York city, §460,000 in Brooklyn and Long Island, and 
the balance is in Yonkers, Buffalo, Newark, Elizabeth, and so forth; 
the property on which it was made was appraised at more than 
§4,000,000 when the loans were effected; we have foreclosed mort¬ 
gages and taken title to more than §751,000 worth, estimated at 
present value; among those we own one church in Brooklyn, and I 
think it is one of the handsomest churches in Brooklyn ; one large 
building, one small farm and thirty-four houses. 

Q. How much had you invested in bond and mortgage ? A. One 
million six hundred and sixteen thousand eighty-five dollars and 
thirty-five cents. 

Q. What have you invested in stocks and bonds ; A. United States 
securities, §712,000; this was the thirty-first of December; also 
§392,050; New York State and city bonds §789,307; Richmond 


377 


4 


city eight per cent bonds, $57,250 ; Mississippi warrants, $9,900 ; that 
is the total of our stock. 

Q. Besides those bonds of this railroad company? A. Yes, sir; 
that is what we call temporary loans. 

Q. Have you any thing loaned temporarily on any other stocks 
and bonds, and if so what class of stocks and bonds? A. I will 
have to give it from memory; the amount is $109,000 on the tem¬ 
porary loans; of that there is $76,000 in the Long Island City 
Shore Railroad ; $10,700 on my stock in the Home fire, which will 
make $86,700. 


By Mr. Flo yd-Jones: 

Q. Ho you mean to you personally or to the company ? A. To 
me personally, on my lire stock ; it is a temporary loan ; there was 
$2,090 on temporary loan secured by Bank of Commerce stock, and 
$1,575 on Home stock, and $3,800 to another party on Home stock, 
forty shares; and $600 on ten shares of the Manhattan Company 
stock. 

Q. The balance is small loans, I suppose? A. Yes, sir; I guess 
I have given you all the loans down to $3,000 or $4,000; I would 
like to make an explanation in regard to a question asked me the 
other day; it was asked me which of the directors were insured; I 
said who I remembered at the time, but there was one I was not 
aware of; the question was asked me if there were any more, and 
I said no ; I want to make this statement, that Mr. William Sturgiss 
is insured for $5,000, premium $135; George Lorillard, $2,000 paid- 
up policy ; I would like to make another statement in regard to the 
expenses charged by the attorney for examining titles; I stated that 
they charged one per cent on the loan ; I have seen the attorney since 
and he said I made a mistake, as they charge one per cent for exam¬ 
ination, if it is a small amount; if it is a large amount it is regulated 
by contract we have with them, which includes the examination of 

the title and all necessarv disbursements. 

«/ 


By Mr. W eiant : 

Q. That does not include the cost of making the searches ? A. 
That includes everything. 

Q. Do they make the searches themselves ? A. Why, the lawyer 
makes the searches. 


By Mr. Husted : 

Q. He charges the disbursements he makes to the county clerk ? 
A. Yes, sir 

Q. A.nd that is a charge paid by the borrower ? A. Yes, sir. 


878 


m 


MATTERS OF INTEREST IN CONNECTION WITH THE 

NEW YORK LIFE INSURANCE 
COMPANY. 

The report of the Superintendent of Insurance of his examination 
of the New York Life Insurance Company, recently published, is bv 
no means satisfactory to those intimately acquainted with its work¬ 
ings. It does not appear from this report that the Superintendent 
made any valuation of the Tontine policies of this Company, as he 
did in the case of the “ Equitable Life.” He simply gives an esti¬ 
mated Tontine surplus, which is only the sum accumulated from 
lapsed policies, and entirely ignores the much greater liability of the 
Tontine fund. The following testimony of Mr. ¥m. II. Beers, the 
competent Actuary of the Company, taken before the Assembly 
Committee on Insurance, last spring, will throw some light on the 
subject (page 2-12): 


Q. What is the amount of the aggregate of the Tontine fund in 
your company ? A. It is over $100,000. 

Q. Give us the exact amount, if you will ? A. $517,504.84 is 
what we estimate our contingent liability. 

Q. How much is the reserve on the Tontine policies ? A. That I 
could not tell you, because it is not calculated separately. 

Q. Can’t you give us some idea? A. No, I could not. 

* Q. How does it compare with the Tontine fund—larger or small¬ 
er 2 A. The reserve ought to be larger. 

Q. How much larger; what per cent.? A. I think it ought to be 
half as much again, perhaps twice as much. 

Q. What do you call the Tontine fund, that you call this $517,- 
000 odd ; explain what you call it ? A. This was reserved on lapsed 
policies and dividends of those who have died; the reserves and 
dividends of the lapsed policies. 

Q. The Tontine funds are the reserves and dividends of the lapsed 
policies? A. Yes, sir, and those who died. 

Q.. And that is how much ? A. $517,504.84. 

Q. That is half a million or more? A. Yes, sir. 

(Page 287). 

Q. How many policies had your company on the 81st of Decem¬ 
ber, 1876, of this class; of the Tontine number? A. I am sorry to 
say I cannot give it to you. 

Q. Don’t you make a distinct item of them ( A No, we reserve 
on them the same as on the others. 


379 


Q. But can’t you give the number *of those policies, about how 
many ? A. Well, I would name some 7,000 for the number. 

Q. How many policies on the Tontine plan did your company 
issue during the last year ? A. I think about 2,000. 

Q. You have issued 2,000 during last year ? A. Yes, sir. 

Q. And you only issued how many in all? A. About 6,000. 


The above speaks for itself, but does it justify the enconium Mr. 
Smyth has pronounced upon the actuarial attainments of Mr. Beers? 
The Superintendent seems to be as much in the dark as is Mr. 
Beers, in regard to the number of these Tontine policies and the 
liability they represent; yet the question is of some importance. 


The manner in which the company’s agency department of this 
State is conducted seems to the writer unsafe to the last degree. 
Their plan of obtaining insurance through the medium of granting 
loans, which loans managed by the State agents and the local boards 
—all interested parties—would scarcel} 7 meet the approbation of any 
clear-headed man, for in addition to the commissions on the pre¬ 
miums in which the local boards participate, they have a further in¬ 
ducement to grant risky loans in the large bonuses they usually 
exact from the borrower. Of course, these bonuses are large in pro¬ 
portion to the uncertainty of the security. To quote further from 
Mr. Beers’ testimony before the Insurance Committee at Albany, 
last spring, (page 259) will show how the loans are placed and who 
places them: 


Q. Have you an agent by the name of W. B. Moore ? A. Yes, 
sir. 

Q. What is he agent for? A. For the State, outside of the 
city. 

Q. Where does he reside ? A. k don’t know whether in New 
York or Brooklyn. 

Q. Idas he anything to do with loans made outside of the city? 
A. No, sir. 

Q. Nowhere ? A. No, sir. 

Q. Is he in any way connected with loans made by the company? 
A. Except in this way : we loan our money through local boards in 
the State, and they are sent generally through his agency. 

Q. Through whose agency ? A. Moore’s agency. 




380 


Q. Have you had information that the borrower has paid any- 
thing to local agents ? A. Yes, sir. 

Q. Have you investigated those cases? A. Yes, sir. 

Q. What became of them ? A. It was more rumor than anything 
else. 

Q. You spoke of certain loans made through Moore? A. Yes, 
sir. 


Q. What loans were those ? A. I will illustrate it in this way, for 
instance, take Rochestor; there we have a local board of trustees,, 
who are composed of fifteen or twenty parties, fifteen say of the 
leading gentlemen of Rochester ; they have in the local board what 
is called a finance committee; if their are any applications for loans 
coming from Rochester, they apply to the local agent at Rochester,, 
who is appointed as a sub-agent to Moore, and controls the agency ’ r 
the same operation is gone through as I have described would be 
gone through with Mr. Lacy, and it comes through Mr. Moore, and 
he sends it to the company. 

Q. Does he receive anything for his services? A. Not to my 
knowledge. 

Q. Does he receive any commission on the loan ? A. Not to my 
knowledge. 

Q. To your information ? A. Yes, sir, I have heard he received a 
commission, but I do not know where it was I heard it; I couldn’t 
give you the case. 

Q. What percentage? A. Well, I couldn’t say. 

Q. You investigated it, you say? A. No, sir. 


The truth is this firm, W. B. Moore & Co., have a contract, the 
terms of which Mr. Beers well knows, by which they are to have 
the management of all loans made by the company outside the City 

of New York. Before Mr. Moore will entertain a loan, a certain 

/ 

bonus must be agreed upon, an order for which is exacted from the 
borrower and deducted from the face of the loan, together with the 
premiums on as much insurance as they can force him to take. Mr. 
Beers, when giving his testimony, certainly knew of this arrange¬ 
ment, and the Superintendent had this testimony before him, and it 
was his duty to examine into such contracts, which he seems to 
think are all right. It is a well known fact that foreclosures are 
being resisted throughout the State, on the ground that such trans¬ 
actions are usurious, which, if sustained, may jeopardize a large por¬ 
tion of the assets of the company. 


380 1 


The following are the contracts made with members of local and 
sub-local boards: 


ARTICLES OF AGREEMENT 


Entered into this day of 187 , by 

and between the NEW YORK LIFE INSURANCE COMPANY 
of New York, and 

of County of and State of 


Witnesseth : That in consideration of the above-named persons 
acting as a local Board of Directors in the above-named place and 
vicinity, for and in behalf of the said NEW YORK LIFE INSUR¬ 
ANCE COMPANY, and having a policy on each of their lives for 
not less than TEN THOUSAND DOLLARS, or being the legal 
holder of one of like amount on the life of some other person— 
they, the above-named local Board of Directors, shall be allowed 
compensation as follows, viz.; five per cent, commission on the orig¬ 
inal (first year’s or parts thereof), cash premiums of their own 
polices, and two per cent, on the renewal premiums of the same : 
also a commission of five per cent, on original (first year’s, or parts 
thereof), cash premiums of policies secured by or through them, in 
their district, and two per cent, commission for collecting and remit¬ 
ting the renewal premiums on 2d, 3d, 4th and 5th years of assur¬ 
ance of such policies, which commission shall be divided pro rata 
among the said local Board of Directors, according' to the amount of 
policies held by them respectively. 

The NEW YORK LIFE INSURANCE COMPANY further 
agrees to loan, upon Bond and Mortgage, one-half of the premiums 
on business done by or through said local Board of Directors, which 
shall be collected in the above-named territory, to parties residing 
therein, on such security as shall be approved by the Finance Com¬ 
mittee of said company. It is further agreed that in the loaning of 
money the said local Board of Directors shall have the preference ; 
but the company shall have the privilege of withdrawing any loans 


made on account of policies that shall from any cause cease to be in 
force within the above-mentioned district. Also to till all vacancies 
which may occur in said local Board of Directors. 

For and in consideration of the commissions and other advantages 
as above named, it shall be the duty of said local Board of Direc¬ 
tors, and they hereby, jointly and severally, agree to use all their in¬ 
fluence to forward the interests of the said NEW YORK LIFE IN¬ 
SURANCE COMPANY, by procuring, or assisting the Agents of 
the Company to procure applications for insurance and forwarding 
them to said Company, and delivering all policies issued thereon, 
and renewal receipts sent them for collection and collecting and re¬ 
mitting the money on the same; and in case at any time, on account 
of a lack of interest by said local Board of Directors in increasing 
the business or protecting the interests of the Company, or for any 
other reason, the officers or Board of Trustees should consider it for 
the best interests of the Company to discontinue business in said dis¬ 
trict through said local Board of Directors, then, in that case, it is 
agreed that the Company may take charge of said district, and that 
said local Board of Directors shall be discontinued and relieved of 
their duties in so far as new business is concerned, but that such dis¬ 
continuance shall in no way affect the interests of said local Board of 
Directors in the business already done by or through them, provided 
however, they exercise due diligence and interest in the collections 
of the renewals of such business. 

It shall be the duty of the said local Board of Directors, after 
having been duly appointed and commissioned by authority of the 
officers of the Company, to meet and elect a President, Vice-Presi¬ 
dent, Secretary arid Treasurer, and hold a meeting thereafter at least 
once in every month, said meeting to be held on or before the first 
day of each month. 

It shall also be the duty of said local Board of Directors, through 
their Secretary and Treasurer, to remit weekly all moneys collected 
by them, and to make a report on or before the first of each month, 
and oftener if required, of all business done by or through them, 
and at same time remit or pay over balance of all moneys due the 
'Company, to the Company’s office, in the city of New York. The 
Treasurer of said local Board of Directors shall give a bond, satis¬ 
factory to the officers of the Company, for at least FIVE THOUS¬ 
AND DOLLARS, for the faithful performance of his duties. 

The local Board of Directors shall be subject to and governed by 
the rules and regulations of the Company. This contract shall not 
be binding on the company until it is approved by the President, 
Vice-President and Actuary, as provided for below. 

In Witness Whereof, We, the said parties to the foregoing con¬ 
tract, have hereunto subscribed our names, and affixed our seals, this 
day of 187 . 


For the NEW YORK LIFE INSURANCE COMPANY. 


380 3 


I lie above contract is approved and the persons named therein are 
hereby commissioned by authority of the officers of the Company. 


IN WITNESS WHEREOF, The President, or Vice-President 
and Actuary have signed their names and caused the seal of the 

Company to be affixed this day of 187 . 

President. 

Vice-President and Actuary. 


SUB LOCAL BOARD AGREEMENT. 


THIS AGREEMENT, entered into this day of 

187 , between the NEW YORK LIFE INSURANCE COM¬ 
PANY, of the first part, and of 

County of and State of of the second part, 

Witnessetii that, whereas said has taken out a 

policy of life insurance in the said NEW YORK LIFE INSUR¬ 
ANCE COMPANY, to the amount of Dollars, and 

paid the first premium thereon. 

Now Therefore the said Company doth constitute and appoint said 

a member of the Local Board of Ref¬ 
erence and Advice for under and subject to all the 

conditions and limitations of certain u Articles of Agreement ” crea¬ 
ting said Board, and approved the day of , 187 . 

In Consideration of the appointment of said to 

said membership, to take effect from and after , he 

agrees to use his influence to forward the interests of the said NEW 
YORK LIFE INSURANCE COMPANY, personally and in con¬ 
nection with the agents of said Company, and also to perform all 
other duties in accordance with the conditions and limitations of the 
aforementioned “ Articles of Agreement,” to which he hereby as¬ 
sents and subscribes. 

This Agreement shall not be binding until approved by the Presi¬ 
dent, and Vice-President and Actuary, as below provided. 


380 4 


In Witness Whereof, we, the parties to the foregoing Agreement 
have hereunto signed our names the day and date first above written. 

-- - - (Member.) 


[For the New York Life Insurance Company.] 


The foregoing Agreement is hereby approved and signed by the 
President, and Vice-President and Actuary of the NEW YORK 
LIFE INSURANCE COMPANY, at its office in the city of New 
York, this day of A. D. 187 

President. 

Vice-President and Actuary. 




381 


Henry B. Hyde recalled: 

Examined by Mr. Moak. 

Q. What was the total amount of insurance on Tontine policies in 
your company on the 31st of December, 1876 ? A. I cannot give 
you the exact figures; our report will be published in a day or two, 
and then you can get the information. 

Q. Can’t you give us the amount ? A. Ho, sir. 

Q. Can’t you approximate to it ? A Ho, sir, I cannot. 

Q. About what is the usual rate of “loading” those particular 
policies ? A. It was about the same as other policies as life policies. 

Q. What is that ? A. It runs from thirty (30) to forty (40) per 
cent. 

Q. As I understand that system of insurance, after taking out the 
forty (40) per cent “loading," if it is a per centage, the balance is 
the reserve upon the policy ? A. Yes, sir. 

Q. Or, in other words, the entire amount, deducting the “ loading,” 
is set aside as a reserve for that class of policies? A. Yes, sir, 

Q. When did you commence that system of insurance? A. I 
think about seven (7) or eight (8) years ago. 

Q. It was in 1869, was it not? A. I think so, seven (7) or eight 
(8) years ago. 

Q. In your report, do you in any way separate the reserve upon 
the Tontine policies from the reserves upon the other classes of 
policies? A. We keep the reserve for all the policies together; in 
the statement that we are about to publish, we publish th e proportion 
of the surplus, which we estimate should not be divided amongst the 
others, but should be held for the Tontine policies alone. 

Q. There is no estimate about it, but it is a matter of actual com¬ 
putation, is it not; do you set aside all above the “ loading ? ” A. 
1 have answered the question. 

Q. Is there any computation about it ? A. Yes. 

Q. How much ? A. It would be too complicated to go into an 
explanation of the Tontine policy here. 

Q. I understood you to say that after deducting the “ loading,” 
the entire receipts of premiums were set aside as a reserve of that 
class of policies ? A. The reserve of the policies that we have to 
keep, is a reserve at four and a half per cent, under the statute. 

Q. And that system of insurance is this: after deducting the 
“loading,” the theory of it is, that the balance, after ten years, 
is all taken by the balance who are living? A. Ho, you have it 
wrong. 

Q. Suppose you give us the theory ? A. The theory is this ; it is 
the ordinary life rate; we receive the premiums; and we return in 
our general statement of all our liabilities to the State, the reserve 
under it; the same as we do in other policies; the surplus that is 
left on those policies is accumulated and divided at the end of the 
Tontine periods, making policyholders subject to the liabilities of the 
business; it is not a liability so far as the company is concerned, 
until it is divided; that gives the undivided surplus in the hands.of 
the company. 


382 



Q. The Tontine periods in your company are what ? A. Various 
periods. 

Q. What is the firsts A. We have some, say ten years, fifteen 
years and twenty years ; various periods. 

Q. Now, you put all those that are to run ten years in one class 
do you not? A. No, sir; that would not be a proper rendering of 
it. 

Q. Well, what do you do? A. There are certain fundamental 
rules which run through, which can only be understood by the actu¬ 
aries, and it is impossible for me to go into that here. 

Q. Is it not the understanding, when a man takes a Tontine life 
policy after deducting loading, the entire premium during the time 
he shall remain in the company, together with all premiums in the 
same class, are to be kept separated, and at the end of the period 
are to be divided among the then policyholders ? A. Not correctly 
stated. 

Q. Well, what is the difference? A. The difference is, the money 
that is collected on the Tontine policies over and above the stated 
reserve is accumulated, and at the proper time is distributed among 
the policyholders under the Tontine system. 

Q. Suppose one of them is forfeited by nonpayment, what- 
becomes of the reserve on that policy ? A. It is given to those 
polices that are not forfeited. 

Q. In the same class? A. Yes, sir. 

Q. How much do you say the entire insurance on the Tontine 
plan is in your company, about ? A. I don’t know, sir 

Q. Well, can’t you approximate? A. I shall publish it in a few 
days. 

Mr. Lang —If lie doesn’t know, let him say so, and there is an 
end of it, and it will then be put on paper. 

Witness —I do not propose to guess at it, because we are going 
to publish it in two or three days, and will give all the information 
to the State and people that they desire; I will send it to you when 
I return, under oath, if you wish it. 

Q. Is the reserve upon the Tontine policies kept separate from 
the reserve on the other classes ? A. It is, sir. 

Q. Then it is very easy to tell, in amount, how much it is ? A. 
Yek, I can tell you what the reserve is. 

Q. What do you mean—the reserve upon the existing policies ? 
A. Yes, sir. 

Q. Can you tell what the surplus upon the Tontine policies is ? 
A. I can, sir. 

Q. Of each class ? A. I can give it to you in aggregate; all 
of it. 

Q. No, exclusive of the loading— A. Please use a proper ex¬ 
pression—exclusive of the reserve, according to the laws of the 
State of New York. 

Q. Won’t you wait until I state my question—exclusive of the 


383 


loading on the premiums, which is deducted to form the reserve ; has 
.any portion of the premiums that is on Tontine policies ever been 
appropriated to any other purpose; now, is that wrong ? A. It is 
snot correctly asked, but I suppose I know what you mean ; I will 
answer ; it never has been used for any other purpose. 

Q. No portion of the receipts upon the Tontine policies, exclusive 
-of the loading, has ever been used for any purpose except the Ton¬ 
tine periods? A. Again incorrectly stated, but I suppose you mean 
t>y asking, if any of the surplus that is being accumulated by the 
•company, to be divided in the future on the policies, has been used 
for any other purpose, I answer no. 

Q. Wherein is my question incorrectly stated? A. I do not think 
it is pertinent to discuss it here, because I do not think you could 
understand it. 

Q. Then you decline to state it ? A. I decline to endeavor to 
.explain the thing any more than I have. 

Q. You decline to make an explanation wherein my question is 
incorrect ? A. It is like putting three amendments to an amend¬ 
ment ; you get them mixed ; I have put the thing correctly in my 
statement; let me explain what it is; in the first place there is the 
legal reserve, according to the laws of the State of New York, which 
we have on hand. 

Q. What is that ? A. It is the legal reserve, according td the laws 
of the State of New York; it is an amount of money with the 
future premiums coming in, compounded at four and a half per cent, 
to keep us solvent. 

Q. That is, to keep that department solvent ? A. Yes, sir, to 
keep that department solvent; then there is the interest with the 
-accumulated surplus, premium, or profit as it may be termed, and 
that is what you call the loading. 

Q. Well, no, it is not? A. Well, then, that is the surplus premi¬ 
ums, o r profits, as it is commonly called, which we accumulate on 
those, and that we have not used for any other purpose. 

Q. Don’t you take out any thing for the expenses of the insur¬ 
ance in'the department? A. It bears the common expenses of the 
rest. 

Q. Well, how do you get it, what it is ? A. It is a percentage 
opon all the premium assets. 

Q. About what is that per cent ? A. I do not remember what it 
has been exactly; last year, I should think, about twelve or thirteen 
per cent. 

Q. Now, what do you call loading; it has been used here very 
freely by insurance men ? A. The loading is the amount that is 
.added to the sum which is necessary for the company to charge to 
remain solvent and to do business; if there were no expenses in 
•conducting the business, no contingencies , no reserves , the loading 
would not be necessary. 

Q. Well, then, the premium would consist of the reserve, as you 
have defined and the loading in your company ? A. 1 es, sir. 

Q. The loading is about forty ’per cent, you say ? A. It is from 
twenty-five to forty per cent. 


384 


Q. And this class of policies are loaded at the same percentage 
as the others ? A. The same as ordinary life policies. 

Q. Then, when you insure a man for $5,000 on the Tontine plan, 
and another man for $5,000 on a life policy, the reserve would be 
the same in each case ? A. T es, sir. 

Q. And that would be set apart as the reserve on the respective 

policies? A. Yes, sir. 

Q. The loading would be put in one common fund, would it? A. 
The surplus premium which would accumulate is put in a common 
fund, but we make a calculation and distinguish it on our hooks, so 
that we know which belongs to which. 

Q. In other words, you put the fund together but in keeping 
your accounts you keep them separate? A. Yes, sir. 

Q. So, in order to determine how much the reserve is on the Ton¬ 
tine policies, you could determine it readily by figuring ? A. Yes, 
sir. 

Q. You could determine what proportion of the surplus belongs 
to the Tontine policies by simply figuring the amount? A. Yes, 
sir. 

Q. In your accounts, are the different policies of the different 
classes kept separate ? A. Yes, sir. 

Q. But you say you have no means of approximating to the 
number of Tontine policies or the amount of insurance in the com¬ 
pany ? A. Not at present, sir. 

Q. Or to their reserve or the surplus ? A. I can give you the 
surplus. 

Q. Of those policies ? A. Yes, sir. 

Q. Well ? A. It is about $2,500,000. 

Q. Upon all the policies ? A. Upon all the Tontine policies. 

Q. Some of them run ten years, and that is the longest, you say ? 
A. They run various periods, I said. 

Q. Well, what is the longest ? A. I couldn't give you the longest 

Q. About the time when this Tontine policy system was inaugu¬ 
rated in your company, was the reserve in your company used at 
any time to pay any thing? A. Never. 

Q. Never? A. Never. 

Q. Now, say, before this Tontine system was inaugurated in your 
company, didn't you use of the reserve five per cent ? A. No, sir. 

Q. Did you not use five per cent of the reserve for any purpose ? 
A r No, sir. 

Q. Did you not use five per cent of the reserve for the purpose of 
paying dividends ? A. No, sir. 

Q. Or any part of it? A. No, sir. 

Q. Was there ever a time in the history of the company when 
any portion of the reserve was used to pay dividends? A. No, sir. 

*Q. Or, when the dividends were declared without having the 
funds in the assets of the company to pay those dividends ? A. No, 

sir. 

Q. When was the first dividend declared ; in what year ? A. In 
1864. 

Q. Have you any means of approximating the number of Tontine 


385 


policies which have been forfeited during the past year ? A. No, 


sir. 


Q. Is that to be published in your statement? A. No, sir. 

Q. Have you any means of determining the amount of the insu¬ 
rance of the Tontine policies which have been forfeited during the 
year? A. I have no information, sir. 

Q. Is that to be published in your statement ? A. No, sir. 

Q. Have you any means of determining the number of Tontine 
policies forfeited since that system of insurance began? A. No, sir. 

Q. Is that to be published in your statement ? A. No, sir. 

Q. Have you any means of determining the amount of insurance 
on Tontine policies since the company commenced that system ? A. 
No, sir. 

Q. Is that to be published in your statement? A. No, sir. 

Q. Have you any means of determining the reserve which is rep¬ 
resented by the Tontine policies since the commencement of that 
system ? A. No, sir. 

Q. Is that to be published in }’our statement ? A. No, sir. 

Q. Have you any means of determining the reserve which is rep¬ 
resented by the Tontine policies since the company began ? A. I 
have no information. 

Q. Is that to be published ? A. No, sir. 

Q. Have you any means of determining the reserve upon the life 
policies which have been forfeited in your company within the past 
year ? A. I have not the information. 

Q. Is that to be published in your statement? A. No, sir. 

Q. Have you any means of determining the reserve of life poli¬ 
cies which have been forfeited since the company began ? A. I have 
not the information. 

Q. Is that to be published in your statement? A. No, sir. 

Q. Has any portion of the Tontine fund which has been put into 
your company, exclusive of the loading, ever been applied to any 
other purpose, except for Tontine purposes? A. No, sir. 

Q. Is the reserve upon the Tontine fund included with the other 
reserve of the company, or is it kept separate? A. It is kept as a 
unit, but b} T our books we know which amount belongs to the differ¬ 
ent classes, and how much belongs to the different class policies. 

Q. Do you state that in your annual report to the department ? 
A. We shall state it in the report we are about to make. 

Q. Do you state it in your annual report to the Superintendent 
of the Insurance Department ? A. I cannot say as to that, but it 
will be published in one of the reports to be published in a day or 
two. 

Q. Has it ever been stated in any of the reports made to the 
Superintendent of the Insurance Department heretofore? A. I 
think we have. 

Q. When ? A. I think we have in the past; I can’t give you the 
dates. 

Q. Have you usually done so ? A. I think we have at times, but 
I cannot give you the dates. 

Q. I have a copy of your annual report here; in what item does 

25 


386 


the reserve on your Tontine fund appear in that? A. I do not see 
it stated in that paper at all. 

Q. In your last annual report your reserve on the Tontine fund 
was not stated separately from the reserve on the life policies was 
it ? A. I don’t see it in that paper. 

Q. Have you any recollection that it was ? A. I can’t say. 

Q. I am requested by a member of the committee to ask you 
what member of your company can give the number of lapses, the 
amount of the reserve, with regard to the amount of insurance and 
the amount of actual reserve on Tontine policies now existing ? A. 
I can give it. 

Q. Then I will ask you to do so ? A. I cannot give it now; I 
can give it at home, in New York. 

Q. Can any other officer of your company? A. No one can give 
all this information without it is imparted to him. 

Q. That I understand ; but it is desired on the part of some mem¬ 
bers that the information shall be obtained, if you will give us the 
proper person who will furnish it ? A. I am the proper person to 
address on the subject. 

Q. Then we will ask you to give us the information at such time 
as you can ; will you do so ? A. Yes, sir. 

By Mr. Weiant : 

Q e You will furnish the information, will you ? A. Yes, sir. 

By Mr. Moak : 

Q In your last annual report to the State superintendent, about 
when was it presented ? A. What year is it. 

Q. For the year 1876? A. It was filed a few days ago. 

Q. In that year the reserve on all classes of policies, Tontine and 
life, was put in as so much reserve, was it not? A. Yes, sir. 

Q. And the surplus on all the. policies was put in that way with¬ 
out any separation? A. Well, I cannot say with regard to that. 

Q. Have you any recollection that it was separated in any way ? 
A. We have separated it in some of our statements, but I am not 
aware whether we have in that or not. 

Q. I ask you for your recollection ? A. I do not remember with 
regard to all the details of the report. 

Q. You swore to it, didn’t you? A. Yes, but I cannot carry the 
whole report in my mind. 

Q. Have you any recollection of having stated the surplus on the 
Tontine fund, and the surplus on the life fund separate? A. I do 
not remember with regard to it. 

Q. Has the amount of the reserve upon the Tontine fund ever 
been ascertained by you ? A. It has, sir. 

Q. When last? A. For the year 1876. 

Q. That is separated from the life policies? A. Yes, sir. 

Q. Has the amount of the surplus, which properly‘belongs to the 
Tontine policies, ever been ascertained by you separately from the 
other policies ? A. It has, sir. 


Q. When? A. For 1876. 

Q. For any other years? A. Yes, sir. 

Q. What years? A. We have made a calculation with regard to 
•our Tontine policies at different times in the past. 

Q. About now frequently ? A. I cannot tell you. 

Q. Have you those calculations now; are they in existence ? A. 

I cannot say, sir. 

Q. When they were made, were they not intended to be preserved ? 
A. I cannot state with regard to any intention at the time. 

Q. You cannot tell whether any of these calculations, made pre¬ 
vious to this year, 1876, are now in existence? A. I cannot say. 

Q. And can you state whether the amount—was there any entry 
made in your books as to the amount of them separately ? A. I pre¬ 
sume there was. 

Q. Then that portion of them is now in existence, I suppose? A. 
Yes, sir. 

Q. Can you approximate to the number of Tontine policies that 
were forfeited in 1876? A. I cannot, sir. 

Q. Can you give any thing like the number? A. Ho, sir. 

Q. Can you approximate to the reserve, standing upon the poli¬ 
cies of the Tontine class, which were forfeited in 1876? A. I can¬ 
not, sir. 

Q. Or as to the surplus ? A. I have answered that before. 

Q. Has any part of the surplus upon the Tontine policies been 
used for the purpose of paying dividends upon the life policies ? A. 
Ho, sir. 

Q. Hever has been? A. Hever has been. 

Q. Have any dividends or any portion of any dividends ever been 
paid in your company from any fund, except the surplus fund ? A. 
Ho, sir. 

Q. How much was the aggregate of the surplus in your company 
•on the 31st of December, 1876? A. Five million five hundred 
thousand dollars; that has been tested by D. P. Fackler, a well- 
known actuary, by the State authorities of the Insurance Depart¬ 
ment of the State of Hew York, and by our own actuaries Mr. 
Phillips and Mr. Van Size; three separate valuations of our liabili¬ 
ties. 

Q. And that is the aggregate value of the surplus on all classes of 
policies ? A It is. 

Q. Is there a corporation in your building called the Mercantile 
Trust Company? A. There is, sir. 

Q. What is its exact name ? A. The Mercantile Trust Com- 
pany. 

Q. Are you a stockholder in it? A. I am, sir. 

Q. To what extent ? A. Five thousand dollars. 

Q. What is the entire capital ? A. Two million dollars. 

Q. All paid in ? A. All paid in. 

Q. Are you a director of it ? A. I am. 

Q. About when was that corporation organized ? A. About seven 
years ago. 


388 


Q. And how long have you been a stockholder in it ? A. I think 
about a year. 

Q. When did that company come into your building ;' A. About 
six or seven years ago. 

Q. It moved from your old building with your company, did it 
not ? A. No, sir. 

Q. Your present building has not been standing seven years, has 
it? A. It has, sir. 

Q. It has been in that building about seven years, you say ? A. 
Seven years, yes. 

Q. How long have you been a director in that company ? A. 
About seven years. 

Q. Were you a director before you owned any of the stock ? A. 
No, sir. 

Q. Then I understood you to say you became a stockholder about 
a year ago ? A. A small amount of stock was standing in my name, 
sufficient to qualify me to become a director. 

Q. How much ? A. I cannot say. 

Q. Have you no idea how much ? A. I cannot say. 

Q. Can’t you approximate to it? A. Possibly $1,000; it is mere 
guess-work, though. 

Q. And the entire stock was $2,000,000, I understood you to say, 
from the commencement? A. No, sir, it has been increased. 

Q. When was it increased ? A. I think it was increased from 
one to two millions about three years ago, 

Q. It was one million, then, it started at ? A. No, it was $500,000 
it started with. 

Q. It was increased to a million about when ? A. I should think 
about live years ago. 

Q. And it remained at that, how long? A. Until it was increased 
about three years ago to two millions. 

Q. Have you held anv other office in that company besides direc¬ 
tor at any other time ? A. I have not. 

Q. Who is its president ? A. Louis Fitzgerald is the president, 
and H. A. Hurlbert is the vice-president; 1 do not remember the 
secretary’s name. 

Q. What other officers has it besides directors? A. That is all. 

Q. What is the business of the company ? A. To loan money on 
improved farms in the west, and on choice real estate in large cities. 

Q. Are its loans substantially outside of the State of New York ? 
A. Entirely outside the State of New York. 

Q. Has your company loaned any money to this Mercantile Loan 
and Trust Company ? A. No, sir, we have no deposit in the com¬ 
pany at all. 

Q. I asked you if you have any loans ? A. No, sir, we have no 
loans. 

Q. Does your company own any of the stock of the company ? 
A. It does, sir. 

Q. How much? A. About $1,400,000. 

Q. Your company owns thejnajority of the stock of the company 
then? A. It does. 


389 


Q. Who casts the vote on that stock in your company on the elec¬ 
tion for directors; what do you call them, directors or trustees ? A. 
I think they are directors. 

Q. Who casts the votes on the stock held by your company ? A. 
I would be the proper person to do that. 

Q. And has your company any interest, directly or indirectly, in 
this company except in the stock of that company that it owns ? A. 
No, sir. 

Q. When was the stock of that company purchased by your com¬ 
pany ; all at once, or at different times ? A. At different times. 

Q. When was the first purchase; how long ago? A. I should 
think about six years ago. 

Q. How much was purchased then ? A. An amount which, with 
successive increases of the stock, would bring the stock up to the 
amount we have at present; I think about $350,000 was purchased 
at first. 

Q. Your company purchased about $350,000 worth of the original 
stock ? A. About that. 

Q. And how much did your company pay for it at the time it was 
purchased ? A. It paid par. 

Q. And nothing more and nothing less ? A. Nothing more and 
nothing less. 

Q. That has since been increased without any additional payments 
to the amount you now hold? A. No, sir, I have not said so; it has 
been increased, and the cash has been paid on the increase. 

Q. Well, you purchased $350,000 worth of the original stock about 
six years ago; when did you next purchase any ? A. When the 
capital stock was increased to a million we took our proportion of it. 

Q. How much was that? A* I stated our proportion of the original 
stock was $350,000. 

Q. And you took $350,000 more ? A. Yes, sir. 

Q. And then it was increased to $2,000,000, and you took $700,000 
more of the stock ; is that it? A. Yes. 

Q. And on each of these occasions did your company pay par 
for the stock ? A. It paid par. 

Q. About what dividend has that company paid on its stock ? A. 
During the first five years it paid seven per cent, but it now pays five 
per cent to the stockholders regularly. 

Q. Is there any surplus or reserve besides the five per cent which 
it pays? A. I believe there is. 

Q. Can you approximate that ? A. I cannot. 

Q. In these cases, when any of this stock was purchased, did you, 
•or any of your family, either directly ir indirectly, receive any thing 
on account of the purchase of the stock ’ A. No, sir. 

Q. From no source ? A. From no source. 

Q. And have you ever received from the company, you or any 
member of your family, any thing on account of your connection 
with that company ? A. Not a dollar. 

Q. Except the small amount of dividend on the stock you owned? 
A. Yes. 


# 


390 


Q. You received that the same as any other stockholder? A. Yes, 
sir. 

Q. And that is all you ever received? A. Yes, sir. 

Q. You received no compensation for your services? A. No, sir; 
I did not. 


By Mr. Floyd-Jones : 

Q. You received the sum the same as any other directors when 
they met? A. Yes, sir. 


By Mr. Moak : 

Q. Well, that is only a few dollars, is it? A. Yes, sir. 

Q. At the meetings? A. Yes, sir; at various times when we* 
meet. 

Q. How often do they meet ? A. About once a week; I have not 
received one dollar from the company, either directly or indirectly. 

Q. Well, that compensation is nominal, I suppose ? A. Yes. 

Q. Has any member of your family occupied any position in that 
company at any time ? A. There is no living male member of my 
family, sir, to occupy any position; the only living male member of 
my family is my little boy about five years of age. 

Q. Well, you have a wife, I suppose, and she has relatives? A. I 
wish you would not ask me such a question; I am willing to answer 
frankly, any thing pertaining to the business, but I trust my private- 
business will not be involved. 

Mr. Husted —If any one asked me a question like that I would 
answer it with a blow. 

Q. Do you decline to say whether any member of your family has 
any thing to do with it ? A. Ho member of my family has, either 
directly or indirectly had any thing to do with the Mercantile Trust 
Company. 

Q. I understood you to say that no relative of your wife occupied 
any position in this company ? A. Yes, sir. 

Q. Is there also a safe deposit company in your building ? A- 
There is, yes. 

Q. Have you any stock in that ? A. I have, sir. 

Q. How much ? A. Two hundred and sixty-five thousand dollars 
worth. 

Q. What is the capital stock? A. Three hundred thousand 
dollars. 

Q. Who holds the balance of the stock ? A. It is held by various 
persons. 

Q. When was that company organized ? A. That company was 
organized three or four years ago; let me see—no, about two years 
ago. 

Q. Does the Equitable company own any stock in that company l 
A. Not a dollar’s worth.. 


391 


/ 1 

Q. Did you pay in that amount of stock as stock of the Safe De¬ 
posit Company ? A. I paid in my proportion in cash. 

Q. How much was your proportion ? A. What I have stated. 

Q. You paid in $265,000 ? A. I did, sir. 

Q. The business of that company is 
belonging to persons and store them in 
sir. 

Q. What portion of this • building, the Equitable building, does 
that company occupy ? A. It occupies the lower corner basement. 

Q. Any thing else; any other portion of it ? A. The sub-cellar 
under it. 

Q. What rent does that company pay for what it occupies? A. 
It has paid $22,000. . 

Q. What proportion of the area of the basement does it occupy, 
as to a quarter, a half, or what? A. Well, between one fifth and 
one-sixth, I should say. 

Q. And the entire sub-cellar ? A. Ho, sir. 

Q. What proportion of the sub cellar? A. Between one-fifth 
and one-sixth, I should think. 

Q. Who are the officers of that company ? A. Ikfr. Miller is the 
president of it. 

Q. What other officers ? A. I do not remember the other officers. 

Q. You do not remember the name of the secretary or vice- 
president? A. I do not know but Mr. Phillips is an unpaid officer 
of that company, he may be. 

Q. Are you one of the directors of it ? A. I am, sir. 

Q. And do you hold any other office in it? A. No, sir. 

Q. Do you receive any compensation from it ? A. No, sir. 

Q. Either directly or indirectly ? A. No, sir. 

Q. For any services you may render in connection with it ? A. 
No, sir. 

Q. Not from any source? A. Not a dollar. 

Q. Has the Equitable loaned to that company any money ? A. 
No, sir. 

Q. Is that company in any way connected with the Equitable ? 
A. No, sir. 

Q. Either directly or indirectly ? A. No, sir. 

Q. Has your company ever loaned any money to the Mercantile 
Trust Company ? A. No, sir. 

Q. Has your company ever purchased any mortgages from the 
Mercantile Trust Company ? A. No, sir. 

Q. Never has taken any securities for any loan upon the mortgages 
held by that company ? A. No, sir. 

Q. Has the Mercantile Trust Company ever borrowed any money 
or securities from the Equitable ? A. No, sir. 

Q. Or the Equitable from that? A. No, sir. 

Q. Or the Safe Deposit Company ? A. No, sir. 

Q. Neither one from the other? A. No, sir. 

Q. Are you a stockholder in the Universal Life Insurance Com¬ 
pany ? A. I am, sir. 

Q. To what extent ? A. I do not remember the precise amount. 


:> receive valuable packages 
safety, is it not? A. Yes, 


/ 


392 

Q. About how much ? A. Is it pertinent, Mr. Chairman, to 
enter into all the private matters of mine; I don’t know what busi¬ 
ness it is of this committee whether I hold stock in one company or 
another; it has nothing to do with the question before us. 

Mr. Husted —I do not suppose any witness can be compelled to 
tell any thing about his private affairs ; and, Mr Hyde, I should do as 
I thought fit about answering that question about my private affairs, 
if I were you. 

Mr. Lang —Well, what has this to do with his private affairs \ 

Mr. Husted —What business is.it of ours if he holds stock and 
bonds in any other company; if I were Mr. Hyde I should answer 
that question or not, as I thought fit. 

Mr. Hale —It seems to be entirely proper for the committee to 
ask whether he is an officer in any other company, but to ask him 
where he has made investments, cannot throw any light on this 
subject. 

Mr. Moak—T he object of asking the question is this: Mr. Hyde 
is the vice-president of the Equitable; suppose, to-morrow, the Uni¬ 
versal should be in a condition where it had absolutely to obtain 
$500,000 or sink, the question is, whether Mr. Hyde, having an 
interest in that company as a stockholder, might not be tempted, 
from his position, to use the funds of the other company. 

Witness —I stated lam a stockholder in the company, and beyond 
that I don’t think I am called upon to make any statement in regard 
to it. 

Mr. Hale —If you will allow me to say, in answer to the counsel 
for the committee—he commenced by saying that Mr. Hyde is the 
Equitable Life Insurance Company. 

Mr. Moak—I understand he holds he majority of the stock. 

Witness —Ho, I do not. 

Mr. Hale —The remark I was going to make is, the responsibil¬ 
ity of the Equitable Life Insurance Company does not depend in any 
measure upon the personal responsibility of Mr. Hyde, or its prop¬ 
erty ; this is a question in regard to his individual or personal 
investments; if he is satisfied to place a portion of his property in 
the Universal Life Insurance Company, or a railroad company, or 
invest it in bonds and mortgages, or buy stocks of a railroad, if you 
please, it seems to me it is a purely personal consideration, which 
this committee cannot have any thing to do with, and cannot throw 
any light on the question now before the committee. Mr. Hyde 


393 


* 


does not desire to witliold from the committee any information that 
can, by any possibility, throw any light on the management of the 
Equitable Life Insurance Company ; but he does object to inquiries 
in regard to his own personal investments, and I hope the committee 
will not insist upon that question being answered. 

Mr. Weiant —One of the questions before the committee is, the 
propriety of allowing an officer of one insurance company to be an 
officer of another. 

Mr. E ale —My point is this, it is not any of the business of the 
committee how Mr. Hyde makes his investments; that is the ques¬ 
tion, as it now stands. 

i 

Mr. Weiant —Well, he may have control of the stock. 

W itness —The stock cannot control the company, because it is con¬ 
trolled by the directors. 

Mr. Lang —Has it no influence; does not the having stock give a 
man influence in the company; if it don’t make any difference in a 
company why, I don’t care, but he may have a controlling influence 
on account of the stock he holds. 

Witness —I have no controlling stock in the company. 

By Mr. Lang : 

Q. You are an officer in the company? A. I am not, either 
directly or indirectly, remotely or nearly. 

Mr. Husted —I move the question be waived. 

Mr. Weiant —I call for the record of the vote on the question. 

The Chairman —The question is, how much stock Mr. Hyde holds 
in the Universal Life; if that question is to be answered, we might 
as well ask him what property he has, and where it is, and to give 
us a schedule of it; the object of our investigation here is to get at 
the facts of the life insurance companies; it is a matter of no 
sort of concern to the people of the United States what the prop¬ 
erty of any member of this committee consists of; if Mr. Hyde can 
£ive us any information in regard to life insurance that is what we 
want, but we do not want to go into the private affairs of a gentle¬ 
man which has no relation whatever to the subject under investiga¬ 
tion. 

% 

Mr. Weiant —I think there is a broad distinction between the 
illustration used by Mr. Hale and the question before the committee; 
if the question put here to Mr. Hyde was, if he individually holds 


394 


any real estate, say in Vermont, I would say it has nothing to do* 
with the question before the committee ; but the question is, “ has* 
he stock in any other life insurance company,” and that goes to the 
question, whether he is interested in another life insurance company* 
and it may be proper for this committee to know whether he is. 

The Chairman —As chairman, I rule that question is not essential 
to be answered. 

Mr. Weiant —I call for a record of the vote. 

Mr. Lang —I wish to explain my vote; did I think the question 
has reference to private relations of a personal nature, then I should 
vote in the affirmative; but I think we are a committee for the 
immediate purpose of generally inquiring into every company; the 
resolution under which we are acting is a general resolution, and it 
is claimed great evils grow up from the fact that persons sustain 
these general relations, and have a controlling influence in one com¬ 
pany while they are managing officers of another. 

Witness —If you will excuse me, as I stated, I have no controlling 
influence in it. 

Mr. Hale —He means to say he does not own the majority of the* 
stock. 

Mr. Lang —He may not own enough to have his dictum obeyed 
by the company, but he may own enough to control it; it is said it 
don’t make any difference how much stock a man owns; I supposed 
the amount of stock a man holds did make a difference, but if it 
does not make any difference, it is intelligence to me that I am glad 
to hear ; I had supposed that the stockholders had a controlling voice,, 
and believing that they do, I shall vote in the negative. 

# * • 

Mr. Moody —Believing this question is simply a question inquir¬ 
ing into the private affairs of individuals, and having no relation 
possible to the manner of carrying on life insurance companies under 
investigation, or any particular life insurance company, that it is not 
a matter of importance to this committee to know whether he invests 
in stock of a railroad company, or of a mining company, or any 
other company, or invests it for any other purpose of proflt, I shall 
vote aye. 

Mr. Weiant—I will say just a word in explaining why I vote iir 
the negative; I am not disposed to go into any strictly private 
matters of the officers, but I believe we are charged with the duty of 
ascertaining, as far as possible, the working and management of 
these companies, not only directly but indirectly; they have the 
power and the right to invest in stocks of incorporated companies,. 


395 


and I think there is a broad distinction between the inquiry as to 
the investments of any of the officers in stocks and bonds of corpora¬ 
tions, and where we inquire as to what are purely private invest¬ 
ments ; for instance, the buying or purchasing of real estate individ¬ 
ually ; we have seen instances already detailed by one of the officers 
of a company here t o-night, where that company has loaned on the 
stock of railroads; now it may be proper that it should be done, but 
I think there is a difference of opinion as to whether it should be 
permitted, and also a question whether an officer of one insurance 
company should be permitted to be connected with another, whether 
their interests may not conflict, whether they may not be opposed, 
and whether it will notact prejudicially to the interests of the policy¬ 
holders ; I therefore vote in the negative. 

Mr. Floyd-Jones —As I do not consider this question at all 
pertinent, and as having any reference to the resolution passed by 
the House calling for an inquiry as regards the solvency and charac¬ 
ter of these insurance companies, I cannot see that the private invest¬ 
ments of any individual, or member or officer of an insurance com¬ 
pany has anything to do with it; I vote no. 

Mr. Lang — Are we now acting under the special resolution or 
under the general resolution directing us to inquire as to life compa¬ 
nies generally. 

The Chairman —We ar e now acting under the general resolution 

The motion was carried by a vote of four to three. 

Ayes—Messrs. Cowdin, Husted, Moody and Floyd-Jones. 

Noes—Messrs. Lang, Weiant and Coulter. 

The Chairman — Mr. Hyde is excused from answering the ques¬ 
tion. 


By Mr. Moak : 

Q. How much is the capital stock of the Universal? A. Two hun¬ 
dred thousand dollars. 

Q. Is the majority of the stock of the Universal owned by the 
stockholders of the Equitable ? A. I think not, sir. 

Q. What proportion of it, so far as your knowledge goes, is owned 
by the stockholders of the Equitable ? A. I could not tell you ; I 
have not seen the list of stockholders for ten years. 

Q. You can’t say whether it is or not from any knowledge of your 
own ? A. My impression is, it is not. 

Q. Well, you do not quite answer my question ; from any knowl¬ 
edge you have, you can’t say. A. I have no knowledge about it. 

Q. Are you a director in the Universal ? A. No, sir. 

Q. Have you ever been? A. I was for two or three years in the 


396 


early history of the company; I have not been for nearly ten years. 

Q. Were you at any time a director in the Universal while you 
were also an officer of the Equitable ? A. I was, sir. 

Q. For about how long? A. For about three years. 

Q. When did your connection with the Universal cease ? A. About 
ten years ago. 

Q. Have you held any office in the Universal since that, either as 
director or otherwise ? A. I have not. 

Q. Who were the officers of the Universal; who have been for the 
past five years, that have had charge ? A. The same as at present. 

Q. Who are they ? A. Well, that is a matter of common fame. 

Q. I ask who, because if we can acquire it from you it will save 
some time? A. William Walkley, the president; Henry J. Furber, 
the vice-president; Mr. Bewley, the secretary, and Mr. H. L. Mon¬ 
tague, the actuary. 

Q. Is that the same Furber, who is the managing director of the 
Charter Oak? A. Yes, sir. 

Q. Is Mr. Furber a stockholder in the Equitable ? A. Ho, sir. 

Q. He owns no stock in that ? A. Ho, sir. 

Q. Is Mr. Walkley a stockholder in the Equitable? A. Yes, sir. 

Q. To what extent, how much stock in the Equitable does he own? 
A. I think $1,000, as near as I can remember. 

Q. Is that all he ever has owned? A. Yes, sir. 

Q. How many persons, without asking names or amounts, can you 
state that are stockholders in the Universal and also stockholders in 
the Equitable ? A. I cannot give it. 

Q. Can’t you give any other than yourself ? A. I cannot. 

Q. Did you have anything to do with the change of officers in the 
Charter Oak? A. Hothing, directly or indirectly in any way, shape 
or manner. 

Q. At the time when that occurred, did the Equitable advance any 
money to any person or corporation on account of it ? A. Hot one 
dollar. 

Q. Or did you, individually? A. Ho, sir. 

Q. I believe I asked you whether the Equitable ever loaned to the 
Trust Company, any money ? A. Ho, sir. 

Q. Are you a stockholder in any fire insurance company ? A. 
Yes, sir; I am a stockholder; I believe I am a stockholder to the 
amount of $2,000. 

Q. In what company ? A. The Guaranty Fire Insurance Com¬ 
pany. 

Q. Did you, at the time when Furber obtained, or attempted to 
obtain the control of the Horth America, advance any money for 
that purpose ? A. Ho, sir. 

Q. Or your company ? A. Ho, sir. 

Q. At the time when Furber attempted to obtain the control of 
the Guardian, did you advance any money individually for that pur¬ 
pose? A. Ho, sir. 

Q. Or your company ? A. Ho, sir. 

Q. Was there not a certified check, certified by your company, 
used in that transaction to your knowledge? A. Ho, sir. 


397 


Q. Was there a certified check, certified by you individually, used 
in either of those transactions ? A. No, sir. 

Q. For any amount ? A. No, sir. 

Q. Did you become personally pledged or liable to any amount, on 
account of either of those transactions? A. No, sir; I have had 
nothing whatever to do with the management of the Universal, for 
the past ten years, or scarcely any knowledge of its transactions. 

Q. 1 am speaking of Furber’s transactions with the Guardian and 
North America ? A. I never knew any thing about it. 

Q. You never advanced any money ? A. No, sir. 

Q. Never was consulted ? A. No, sir. 

Q. And never had any thing to do with either of them ? A. I 
never had any thing to do with them, except to advise against it. 

Q. Do you know any thing about how these transactions were 
accomplished ? A. I have no recollection about it at all. 

Q. You never had any personal knowledge about it? A. I do 
not know 7 any thing about it. 

Q. And never did ? A. No, sir. 

Q. And the same as to the North America ? A. No, sir. 

Q. But you do not know 7 whether the Universal had any thing to 
do with that transaction or not? A. I have no knowdedge whatever. 

Q. Is this Guaranty Fire Insurance Company one of the com¬ 
panies in which your company procure policies as collateral ? A. 
YYs, sir. 

Q. What is the capital of the Guaranty ? A. I am unable to tell 
you. 

Q. Is it more or less than $100,000 ? A. I think it is $200,000. 

Q. Can you tell to w 7 hat extent your company has insured in that 
company during the past five years ? A. I cannot; only a very 
moderate amount. 

Q. Is there any understanding, directly or indirectly, that your 
company, the Equitable, shall give the fire insurance company in 
your building any particular amount of risks, or an} 7 proportion of 
the amount of risks which your company take ? A. As the com¬ 
panies are in our building w r e endeavor to favor them in the fire 
insurance w r e have on bonds and mortgages. 

Q. Was there any understanding, either directly or indirectly, 
that your company should give that company any proportion of the 
insurance you make on collaterals on bonds and mortgages ? A. 
Y r es, sir; there is. 

Q. What was this understanding? A. We agreed to give a cer¬ 
tain amount of fire insurance to the Hanover and the Guaranty, I 
think, that is all. 

Q. Those are the only tw^o ? A. Those are the only companies. 

Q. How much to the Hanover? A. I do not remember. 

Q. Can you remember how much to the Guaranty ? A. I cannot. 

Q. How many fire insurance companies are there in your build¬ 
ing ? A. I think there are three. 

Q. What is the name of the other ? A. # The American, the Han¬ 
over and the Guaranty. 

Q. Can you tell us, approximately, what proportion of the fire 


398 


insurance policies, which your company holds as collateral, is held 
in these three companies ? A. I cannot state. 

Q. Can’t you state whether a half, a quarter or an eighth ? A. It 
is a moderate amount, and I cannot state the amount. 

Q. When a loan is made by your company, and fire policies taken, 
is the premium on fire policies paid to any officer of the company, 
or agent of the company? A. No, sir. 

Q. Who obtains the insurance ? A. The borrower himself. 

Q. Is any commission paid to any one connected in any way, 
directly or indirectly, on account of the insurance ? A. Not one 
dollar. 

Q. You do not have any one in your company who is called the 
insurance agent or clerk, the same as other companies do ? A. No, 
sir. 

Q. Have you, within five years past, received, directly or indi¬ 
rectly, from any person or corporation, any sum of money whatever 
as an inducement, directly or indirectly, for the loan, deposit or use 
of any money of the Equitable ? A. No, sir, nor for the last eighteen 
years. 

Q. And you never have received any thing, either money or any 
thing else, either directly or indirectly, for any money or loan, or 
deposit of any money nor security of the company? A. Not one 
dollar. 

Q. How much was the advertising of your company for 1876? 
A, I don’t remember the precise figures. 

Q. Can you get it from the returns ? A. 1 don’t see it here, sir. 

Q. Is it not stated there as one of the expenses? A. I don’t see 
it as a separate item; I see here about $40,000; it is likely it is in 
that item. 

Q. Is that included in the item of sundry expenses ? A. I pre¬ 
sume it may be. 

Q. Is it? A. I cannot say; here it is, “cash paid for advertis¬ 
ing, $55,000.” 

Q. Then the expense was $55,419.64? A. Yes, sir. 

Q. Was there any commission paid out of that to any person for 
or to you ? A. No, sir, not one dollar. 

Q. Was the entire portion of that money actually paid for adver¬ 
tising? A. Every dollar. 

Q. Your company has a building in Boston, or an office, which? 
A. A building. 

Q. How much did you say the expense of that was ? A. About 
$1,000,000. 

Q. In what other place has your company a building besides New 
York and Boston ? A. In no other place. 

Q. In what other places do you pay rent of offices ? A. In various 
places throughout the United States. 

Q. Give the large places, if you please? A. Well, Chicago. 

Q. How much rent do you pay there ? A. I could not tell you 
how much rent we do pay there. 

Q. Well, about how much ? A. I have no recollection in regard 
to it; we have an office in Cincinnati and one in St. Louis; the 


399 


general rents we pay for offices and agencies are two or three thou¬ 
sand dollars, as the case may be; they are very small. 

Q. Don't you pay about $10,000 in Chicago? A. I do not re¬ 
member what amount we pay in Chicago. 

Q. Is that the largest amount you do pay ? A. That is the largest 
we pay in Chicago. 

Q. Have you an office in Philadelphia ? A. Yes, sir. 

Q. And one in New Orleans ? A. No, sir. * 

Q. One in Cincinnati? A. Yes, sir. 

Q. One in Buffalo ? A. I think not; I think the agents pay their 
-expenses of their offices there. 

Q. About what is the largest amount received by any of your 
general agents per annum ? A. That I cannot tell you, sir. 

Q. Can you approximate ? A. Well, I should think $6,000 or 

$ 8 , 000 . 

Q. Do you pay them salaries or commissions? A. We pay them 
-commissions. 

Q. Can you approximate to the amount of commission received by 
the general agent in New York? A. We have no general agent in 
New York; we have agents in New York, but no one that attends 
to the collection of premiums as in the country. 

Q. What is the largest amount paid by your company to any 
agent ? A. I should think that none of them received beyond $8,000 
a year. 

Q. i r ou have got an item here, cash paid for surrender policies, 
$1,132,783.43; about what per cent of the reserve did your company 
pay on those policies? A. Various suras, according to the age. 

Q. Give us the variations, the highest and lowest ? A. It is quite 
. impossible for me to do it. 

Q. You have some knowledge what the highest and lowest are? 
A. I could not give them from recollection. 

Q. Did your company pay to exceed forty per cent of the reserve 
of the policies ? A. I could not say without an examination of the 
books. 

Q. Is there any case where your company has paid, to your knowl¬ 
edge, to exceed fifty per cent ? A. I could not say, without an 
examination of the books. 

Q. I ask you for your knowledge? A. I have no knowledge 
without first examining the books. 

Q Can you not state a case in which your company has paid to 
exceed fifty per cent ? A. I told you I have no knowledge without 
.an examination of the books. 

Q. In case of a loss by your company, to whom are the checks 
made payable? A. To the order of the beneficiary. 

Q. In all cases? A. Yes, sir. 

Q. Are they sent to the general agents to be delivered to the 
beneficiaries? A. They are sent in various ways, according to the 
•exigencies of the case; as a general rule, though, they are sent to 
the agent to be delivered to the person. 

Q. Are there any cases where the checks for losses, or for sums to 
be paid—are the checks that are issued for payment of surrender 


400 


policies always made payable to the order of the beneficiary ? A, 
I believe it is the invariable rule to make those checks payable to the 
order of the beneficiary. 

Q. Are they usually sent to the agents where they reside at a dis¬ 
tance, or is it done by letter? A. I think they may be sent to the 
agent to deliver the check, but they are always payable to the order 
of the beneficiary. 

Q. The aggregate commissions paid to agents in 1876 was $411,- 
810.30 ; is that correct? A. I presume it is correct sir; yes, sir. 

Q. And in addition to that your company paid for traveling ex¬ 
penses of agents $36,594.19? A. Yes, sir. 

Q. Now what were those traveling expenses paid for ? A. I don't 
know T * any better answer to that question than to say they were paid 
for traveling expenses. 

Q. Traveling expenses of what person ? A. Various persons in 
the employ of the company. 

Q. Say the president ? A. No, sir, I very rarely travel. 

Q. Have you, within the past five years, at the expense of the com¬ 
pany? A. No, sir, except to come to Albany. ' 

Q. Well, the vice-president? A. He takes about two trips a year 
west, and is gone about three weeks each trip, to go among the agents 
of the company. 

Q. Are his expenses paid ? A. His expenses are paid whenever 
he is traveling exclusively on the business of the company. 

Q. Well, wdien he is not traveling exclusively on the business of 
the company, are they paid in any case ? A. No, sir. 

Q. Have they ever been ? A. No, sir. 

Q. And in those cases where they are paid it is only the actual 
expense? A. Yes, sir, that is all. 

Q. Has any other officer of the company received any thing when 
traveling beyond his actual expenses; has he ever been paid any 
thing in addition ? A. No, sir. 

Q. Here is an item, cash paid for rent less (blank) dollars; re¬ 
ceived under sub-lease, $108,568.43 ; what is that for ? A. We charge 
ourselves a rent of $65,000 for our own office; the Equitable build¬ 
ing pays a rent to-day, after taking out every possible expense, the 
running of the elev tors and taxes, the fireman and coal and ele¬ 
vator boys, and every actual expense, it pays net five and a quarter 
per cent , taking account of our own rent, which we have put in at 
a price which is reasonable for the amount we have. 

Q. I don’t understand that that answer explains this item ? A. I 
don’t know r wdio prints this blank ; I am not responsible for the print¬ 
ing ; under sub-lease, “cash paid for rents” includes our rents 4 and 
the various rents throughout the United States we have paid ; it is- 
the total amount of our rents throughout various places in the United 
States. 

Q. And among that is $65,000 which you pay for the rent of the 
Equitable building ? A. Yes, sir, and I think there is included in 
that about $10,000 of the expense of taking care of our rooms, heat¬ 
ing, lighting, and every thing in connection with it. 

Q. If the building belongs to the Equitable company, why do you 


401 


charge the company with it? A. Because we think it is wise t<5 
show precisely what the building produces. 

Q. Do you actually go through the form of paying the amount 
and charging it to one fund and then crediting it to another fund ? 
A. Yes, sir. 

Q. In what way is it brought about? A. It is received as rents 
and charged as rents paid, so that we can properly make up an esti¬ 
mate of our total rents. 

Q. How much was your company paying for rents of the building 
proper before you went into the present building ? A. Thirty thou¬ 
sand dollars a year. 

Q. How long has it been your custom to. charge yourself with rent 
in order to make the receipts, as you have stated, $65,000 a year? 
A. We have for years past kept our books that way ; our gross rents 
are over $300,000. 

Q. How long have you kept them that way ? A. I think for the 
last three or four years. 

Q. In order to get at it, you take this $65,000 out of the surplus ? 
A. No, we simply charge ourselves with so much rent paid out, and 
credit ourselves with so much rent received ; it is more for balancing 
our books than any thing else; it makes no difference in the end. 

Q. One balances the other? A. Yes, sir. 

Q. The only object is to show T a large net income from the build¬ 
ing? A. The only object is to show' the true production of the 
building ; we cannot expect to have our offices for nothing, and we 
make an estimate of what it is worth; 

By Mr. Husted : 

Q. You charge yourselves about what you would pay if you were 
hiring offices? A. We charge ourselves about one-half what we 
would have to pay any one else. 

By Mr. Hale : 

Q. You charge yourselves for the Boston building in the same 
way ? A. Yes, sir. 

By Mr. Moak : 

Q. In the Boston building, about wdiat does that produced A. 
Three anda-half per cent net, and with the unrented rooms four and 
a-half per cent net; these figures, I w'ant it distinctly understood, 
are net rents; the Equitable building pays over seven per cent gross. 

Q. Are any portions of the rent paid in money other than the 
$65,000 the Equitable pays ? A. No, sir. 

Q. How' much do you charge yourselves for the rent of the Boston 
building? A. Eive thousand dollars. 

Q. Well, now, here is an item “cash paid for commuted commis¬ 
sions, $9,580what is that? A. Items of commissions th t are due 
in the future; w r e buy at a present value so as to relieve ourselves 
of future obligations; we have gradually paid up future commis¬ 
sions, so that commissions w r e must pay in the future for all of the 
26 


I 


402 

premiums received, I think, would average about two and a-half per 
cent. 

Q. Well, here is an item of $105,091.67 cash paid for furniture 
and fixtures and safes for home and agency offices; what w r as that 
paid for? A. I presume for just exactly what it there states, such 
as the fitting up of our own offices and other things mentioned 
therein. 

Q. When was that fitted up ? A. That was fitted up last year; 
that is the completion of the building. 

Q. It is for furniture of that portion of the building which your 
company occupies, is it ?* A. It is probably for the fitting up gene¬ 
rally of the whole of the building which our company occupies and 
other portions as well, and it is charged up in that way; there may 
be included in it some agency offices also. 

Q. Has any portion of it been expended, except for furniture for 
the home office and agency offices ? A. Hot one dollar. 

Q. About what proportion of it is for furniture at Thorne office? 
A. I should think, certainly three-fourths of it. 

Q. Well, here is an item, “ cash paid for agency offices and build¬ 
ing expenses, $91,210.36 ; what is that for; I thought that you said 
that the item for agency offices above included that ? A. Well, they 
are for various items which I cannot give you to-day ; they are out 
of my head now 7 . 

Q. Isn’t that for the rent of' the offices of the different agents ? 
A. That is the one I have just explained ; I have no recollection in 
regard to it, only I presume it is charged up to that portion of the 
building. 

Q. What building ? A. To the Equitable building in Hew York. 

Q. Ho, that is the item for $108,000 above, is it not ? A. Well, I 
presume that is an addition. 

Q. You have “cash paid for rent, $108,568.43?” A. Yes, sir. 

Q. Then “ cash paid for agency, office and building expenses, 
$91,210.36 ; ” what is that for? A I cannot give you the items out 
of my head. 

Q. Can you give the items of any of them ? A. I cannot, sir. 

Q. Can you give an idea of what it is expended for ? A. I can¬ 
not from my recollection. 

Q. Does your return to the State superin tend ent for 1876, of the 
expenses of your company, include all the expenses of your company 
during the year 1876, for any purpose? A. Yes, sir; it does. 

Q. The real estate of youi company is stated to be $5,615,637.88; 
what real estate does that include ? A. It includes the buildings and 
real estate in Hew York and Boston, and the property we have pur¬ 
chased under foreclosure. 

Q. And it includes all the real estate to which your company has 
any title ; I mean title as distinguished from loan on bond and mort¬ 
gage? A. Yes, sir. 

Q. And on the 31st of December, 1876, the aggregate amount of 
loans by your company secured by bond and mortgage was $16,237, 
264.45 ? A. Yes, sir. 

Q. All that was secured by mortgage ? A. Yes, sir; I think that 


403 


the reports will change the items in regard to the expenses of the 
building; I think that is where that construction of the building is 
charged to the sinking fund ; this $91,000,1 think, is for the construc¬ 
tion of the building and charged as a sinking fund to the expense. 

Q. Then your building cost that, in addition to the three millions 
and three quarters you spoke of the other day? A. Yes, sir; we 
have charged $230,000 to a sinking fund. 

Q. Y our building cost three millions and three-quarters, you said ? 
A. Well, about $4,000,000. 

Q. That is the home building in New York ? A. Yes, sir. 

Q. Well, in addition to that, has any thing been used in the build¬ 
ing, except for the furniture spoken of, for any purpose ? A. No, 
•sir; about $200,000 has been charged up to expenses as a sinking 
fund, and that includes the $91,000, I presume, you have spoken to 
me about. 

Q. Does that also include the law library which your company 
owns in the building? A. Yes, sir. 

Q. You do own a law library? A. Yes, sir: we do own a law 

library. 

•/ 

Q. I mean your company owns a law library, does it not ? A. 
Yes. sir. 

Q. Which is in the building? A. Yes, sir. • 

Q. About what was the expense of that ? A. I think about 

$ 20 , 000 . 

Q. In what item is that charged; in the expense of the building, 
or in this item of $91,000, that you have spoken of ? A. It may be 
charged there ; I am not absolutely certain. 

Q. Has not your company on loans other than bonds and mort 
gage over a million dollars ? A. No, sir; we have very little loan on 
collateral; that has been against our rule to do that. 

Q. The amount which is stated to be in your assets, interest to be 
due on bonds and mortgages, $272,673: about what proportion of 
that was overdue on the 31st of December, 1876 ? A. I don’t take 
much stock in this blank of yours, I don’t know any thing about it; 
that is due and accrued ; that is chiefly accrued interest. 

Q. What proportion of it is overdue and unpaid ? A. It is nearly 
all accrued inteijpst; we have a large amount of bonds and mort¬ 
gages, and accrued interests before the time of payment are very 
large. 

Q. You have an item here among your assets “ interest due and 
accrued on collateral loans, $16,830 ;” wouldn’t that indicate about 
the amount of loans stated above? A. It may; we loan large 
amounts in governments. 

Q. “ Interest due and accrued on bonds and stocks, $16,907.55 ; ” 
what kinds of bonds or stocks are those ? A. Governments and State 
Stocks. 

Q. And any others ? A. That is all, sir ; we have very few town 
bonds. 

Q. “Rents due and accrued on company’s property on lease, 
$42,141.54: ” what is that? A. I cannot give you the items of it 
now. 


I 


404 

Q. Well, I ask you what is the character of it ? A. I cannot give 
you the facts of it now; the loading stated in the return is the load¬ 
ing as computed in the Insurance Department. 

Q. This per centage of loading is adopted all over, is it ? A. No, 
sir; it is a calculation of their own in the department that they 
make. 

Q. Is there that amount which is invested as part of the reserve 
of each policy ? A. No, sir; this is of their own calculation ; they 
have made figures in that way; it has nothing to do with us at all. 

By Mr. Hale : 

Q. There is nothing in your books about loading, is there? A, 
No, sir ; we don’t know any such item as loading. 

By Mr. Moak : 

Q. Suppose a man pays $200 this year; this is his first premium, 
and he pays next year $200, you take out one-fifth for loading ? A. 
No, w T e add it to the premium. 

Q. You do not invest it as a reserve ? A. No, sir ; that belongs to 
the actuarial books; the amount of premium is one thing, and the 
loading is another; we take the Amount of the premium, but the 
loading is kept in the actuarial books; so far as we are concerned, 
we have to do with the net reserve and surplus premium. 

By Mr. Moody : 

Q And the other is for the expense, I suppose ? A. It is for the 
contingencies of the business. 

By Mr. Moak : 

Q. Is it deducted the first year, or every year that the policy is in 
force ? A. It is not deducted. 

Q. Well, is it allowed ? A. No, sir; it is not allowed at all. 

Q. Well, is it set aside? A. No, sir; it is not set aside at all. 

By Mr. Lang : 

Q. Then what the devil is it ? A. It is very hard to explain actu¬ 
arial questions to men who are not educated to it; I have endeavored 
to explain it. 

Q. You have not quite answered the question whether this per 
centage above the actual premium is collected each year ? A. We 
collect the full premium every year; the full premium includes 
what you call the loading and the net premium or raw premium. 

Q. The amount invested as the reserve is the same each year, i& 
it ? A. I do not understand you. 

Q. Suppose you invested as the reserve, say sixty per cent of the 
first premium, do you reserve the same per cent of all the other 
premiums? A. We reserve all we can save, whatever it is; on the 
business books of the society we have nothing to do with the load¬ 
ing ; there we have to do with the reserve, according to the laws of 


405 


the State of New York ; and the surplus according to the laws of 
the State of New York; in the actuarial books we have to do with 
the loading and the net premium. 

Q Then you have two sets of books, one which you call the busi¬ 
ness books and the other the actuarial books ? A. That is very close 
to it—that is right. 

Q. Well, you put upon the actuarial books the entire premium ? 
A. On the actuarial books we keep a correct account of all the 
policies and every thing an actuary wants to know to make up the 

tables. 

Q. You carefully avoid telling me what I want; in your actuarial 
books you enter the entire premium you receive on the policy ? A. 
We enter the entire premium; yes, sir. 

Q. In one portion of your actuarial books you enter the aggregate 
premium received on every policy? A. Yes, sir. 

Q. Now, in your actuarial books do you also enter the reserve 
separately, or what you call the net premium, without loading it ? 
A. We keep on the actuarial books an account of the full premium, 
also an account of the net premium and loading. 

Q. Separately, are they? A. Yes, sir. 

Q. Give the entire assets of your company during the year ? A. 
Our entire assets during the year was about nine millions and a 
quarter. 

Q. How much of that in 1876 was for new policies issued ; have 
you that down here separately? A. No, sir, these are not our 
blanks. 

Q. How many was the whole number of life policies issued by 
your company? A. Forty thousand nine hundred and sixty-six life 
policies, insuring $150,339,807. 

Q. Here is new policies issued during the year, 6,217? A. Yes, 
sir, we issued life policies during the year, 6,217, insuring $18,- 
486,405; endowment policies, 446, insuring $1,127,545 ; all other 
kinds of policies, 81, insuring $239,440. 

Q. Is there anywhere in your statement where you stated the 
amount of accrued premium received during the year? A. On new 
policies ? 

Q. Yes? A. No, sir. 

Q. That is nowhere stated ? A. No, sir. 

Q. Nor is it anywhere stated the amount set apart as reserve and 
the amount of excess or loading? A. Oh, yes, sir, that is men¬ 
tioned. 

Q. Where, in the annual return ^ A. Well, I can tell you what 
it is; that return, as I told you before, is not my, return, and I am 
not familiarized with it; it is made up on a ditferent plan. 

By Mr. Wei ant : 

Q. It appears on the actuarial books, I suppose ? A. Oh, yes. 

By Mr. Moak : 

Q. Can you tell us the aggregate premiums received in 1876 on 
all policies ? A. I cannot. 




/ 


406 


By Mr. Moody : 

Q. You keep an account of them in your books ? A. Yes, sir, 
but it is impossible for a man to carry all the books in his head of a 
large life company that has issued over 100,000 policies. 

By Mr. Moak : 

Q. I asked you if you had an account ? A. Oh, yes, sir, we keep 
a correct account of all these things in our books. 

Q. In your list of policies expired during the year 1876 and 
terminated by death, those are policies upon which the liability of 
the company was conceded? A. Yes, sir, oh yes, we paid them. 

Q. By expiry, nine; what policies are those? A. Well, those 
were payable at a fixed period, which came due during that year. 

Q. By surrender, 2,197 ; what policies are those—are those poli¬ 
cies where you paid surrender values for them ? A. Yes, sir. 

Q. And they represent an aggregate insurance of $11,677,188? 
A. Yes, sir. 

Q. Here is an item, by lapse, 3,406, representing an aggregate 
insurance of $12,685,900; what policies are those lapsed policies ? 
A, Policies that have terminated. 

Q. Policies that have been forfeited by reason of non-payment of 
premium ? A. I think so. 

Q. Well, can you tell us, or approximate, about what the average 
of those policies are as to years of duration ? A. No. 

Q. As an insurance man don’t you have an idea; can’t you tell 
us about the usual period of time those policies have run—about 
the average ? A. I could not. 

Q. Can you tell us about what the average reserve would be upon 
them ? A. I could not. 

Q. Or about what the average of insurance would be? A. I 
could not. 

By Mr. Weiant : 

Q. They could be determined by the actuarial books ? A. We 
don’t keep our books to give up ; it could be got by a very great 
deal of labor, but I hope now to get down to legitimate business; 
for the last nine months I have been doing little else than being 
investigated. 

Q. What is the difference between expiry and maturing ? A. 
They are nine by expiry and twenty-seven by maturity ; those are 
policies that became due. 

By Mr. Moak : 

Q. Is your company a member of the Chamber of Life Insurance l 
A. Yes, sir. 

Q. Do you remember when there was an unpleasantness between 
Stephen English and the Mutual Life ? A. Yes, sir. 

Q. Did you have any thing to do with the settlement of that 
difficulty ? A. I did. 


I 


m 


Q* Was there any thing paid Mr. English on any account at that 
time or agreed to be paid to him ? A. There was nothing paid to 
him by any life insurance company 7 . 

Q. Was there any tiling agreed to he paid to him by any life 
insurance company ? A. No, sir. 

Q. Was there any thing agreed to be paid to him by any officer 
of a life insurance company ? A. No, sir. 

Q. Or by any one connected with life insurance ? A. There was 
nothing paid to him by a life insurance company, directly or indi¬ 
rectly, in any way, shape or manner. 

Q. Was there any thing paid by any one connected with a life 
insurance company, either directly or indirectly ? A. I have stated 
the fact. 


By Mr. W eiant : 

Q. Do you know whether any thing was paid by any tire insur¬ 
ance company ? A. No, sir, there was nothing paid by any institu¬ 
tion incorporated by the laws of this State, or any other State. 


By Mr. Moak : 

Q. Was there any thing paid, or agreed to be paid to him, by any 
one connected with life insurance ? 


By Mr. Husted : 

Q. I will amend that by saying “out of the funds of any life 
insurance company ? A. No, sir ; there was not. 

Bv Mr. Wei ant: 

Q. Neither directly nor indirectly? A. It had nothing to do with 
any life insurance company ; it was a private quarrel entirely out¬ 
side of life insurance. 


By Mr. Moak : 

Q. It was a quarrel growing out of life insurance? A. No, sir; it 
was a private quarrel entirely. 

Q. Was it not a publication in a paper run by English, against 
what was claimed to be the bad management of the Mutual Life by 
its president ? A. That was a personal matter. 

Q. Was not that it, or substantially that? A. No, sir. 

Q. Was not a suit brought by the company against him in the 
name of the company and lie held to bail for a large amount ? A. 
There was no such settlement for that account. 

Q. Was there no such suit brought ? A. I don’t remember. 

Mr. Moak —The point of m 3 7 question was this, whether there 
w^as anj 7 thing in the conduct of the Mutual Life Insurance Com¬ 
pany, in any way, which it was desired to have suppressed, and 
whether any thing was paid, directly or indirectly, for the suppres¬ 
sion of it; that is the point of 1113 ' question, because if I was con¬ 
nected with an insurance company and had done any thing wrong, 


408 

and was going to settle it, I certainly should not use the funds of the 
insurance company; I therefore suggest that the question whether 
it was paid by any one connected with an insurance company is a 
proper question. 

The Chairman —Our business is connected with life insurance, 
and Mr. Hyde has testified that nothing has been paid directly or 
indirectly out of the funds of the company ; that satisfies me. 

Mr. Hale— There is no insurance company a party to this suit; 
it was a libel suit brought by one man against another. 

The Chairman— It was a private quarrel, growing out of insurance 
business. 

Mr. Moak —My question is, whether any thing was paid or 
agreed to be paid to English by any one connected with insurance 
companies ? 

Mr. Husted —I move to amend it to “ out of the funds -of the 
insurance company.” 

Mr. Hale— If you will let me make a suggestion, that is, that 
the question be amended so as to inquire whether any sum was paid 
by any person in order to suppress any facts in regard to the man¬ 
agement of life insurance companies ; I don’t think there would be 
any objection to it. 

Mr. Husted —I prefer to take the question as I have amended it. 

Witness— I answer that; no, sir. 

Mr. Moak —How, I would prefer to put my question without 
amendment. 

Mr. Chairman— Do you mean by any officer of the company ? 

Mr. Moak —I mean in any way connected with the company ; 
either policyholder, officer, director, or in any way. 

The Charman— Such a question is irrelevant. 

The Witness —I have endeavored to meet this matter frankly; 
it seems to me a very fine point is sought to be raised; I came out 
with the facts ; this was a private quarrel: it was settled not by any 
life insurance company directly or indirectly ; and there was no 
promise on the part of any life insurance company, or on the part of 
any officer for a life insurance company to pay one cent. 


409 


By Mr. Moak : 

Q. Did the proposition emanate from a person having any thing 
to do with the management of a life insurance company or with the 
business ? A. No, it was a private quarrel, and Mr. Winston was in 
very delicate health, and Mr English was attacking him from month 
to month, and a settlement was made, and certain persons acted as 
peacemakers, but it had nothing to do with life insurance; I wish 
to say, on behalf of Mr. English, that there was no animus against 
the Mutual Life, but it was against Mr. Winston personally ; it was 
a personal quarrel all the way through; Mr. English has told me a 
hundred times that he had nothing to do with the Mutual Life. 

Mr. Moak —I have not yet got an answer to my question. 

The Chairman —The question has been substantially answered. 

Mr. Weiant —I think Mr. Hyde now places it entirely outside of 
insurance matters, and I question whether the question would be 
proper. 

By Mr. Moak : 

Q. For how many years were the officers of the Equitable paid on 
the basis of a per centage ? A. Oh, you went all over that. 

Q. Were the assets of the company much larger during the time 
when the agents paid—I am now speaking independent of interest 
on premiums; but, were the assets of the company, in premiums, 
much larger when the officers were paid a per centage than they 
have been in the past two or three years ? A. No, sir; the company 
has been growing, gradually, every year since its organization. 

Q. Was there no year when its business was larger than it is now ? 
A. We issued more in policies for the five years ending 1873 than 
any company in the world, for five years ; since that time, in conse¬ 
quence of the depression that has occurred, all business has been 
less. 

Q. My question is, did your company issue more policies during 
the time it was paying its officers a per centage than it has since ? 
A. Yes, sir. 

Q. What proportion more ? A. I cannot say. 

Q. Can’t you give some idea? A. No; the two things have no 
connection one with the other. 

By Mr. Hale : 

Q. You attribute it only to the depression in business ? A. Yes, 
sir. 


By Mr. Moak : 

Q. At any time did your company have an agent in Cincinnati 
named Hodder ? A. I believe so. 

Q. Was he guaranteed a certain amount of income each year ? A. 
I don’t remember that he was. 


/ 


410 


Q. Is it not a fact that for a certain number of years your com¬ 
pany guaranteed him $10,000 a year? A. No, sir ; it is not worth 
$2,500 a year. 

Q. Any year ? A. No, sir. 

Q. To any of your officers have you guaranteed any particular 
sum? A. No, sir. 

Q. To any of your agents? A- We may have done so. 

. The question is not what you may have done, but whether you 
did ? A. I cannot give you the exact facts in regard to it; we have 
paid some agents a salary, and some not. 

Q. What is the highest you have paid ? A I can't remember. 

Q. Can you approximate it ? A. I cannot. 

By Mr. Moody : 

Q. I understand you to say that you did not guarantee any salary 
to any agent? A. We do not now ; I don’t think we have three 
agents in the country we do pay a salary to. 

By Mr. Moak : 

Q Mv question is, did you ever do so? A. Yes, sir; we did; in 
prosperous times, immediately after the war, and made a great deal 
of money by doing so. 


By Mr. Hale : 

Q. You saved a great deal of money by doing so ? A. Yes, sir. 
Q. You made more out of them than if you had paid them a 
salary? A. Yes, sir. 


By Mr. Rusted : 

®Q. If they had been paid a commission their receipts would have 
been larger? A, Yes, sir; but not in these times it would not; 
we would not think, in these years of doing it. 

Q. At the time when your company inaugurated the Tontine sys¬ 
tem, were any efforts made to induce parties who held life policies 
to change it to the Tontine system ? A. No, sir. 

Q. None whatever? A. No, sir; I don’t think I ever asked a 
person. 

Q. Did any one ask them ? A. No effort was made that way at 
all. 

Q. Was there not quite a large number that did change? A. A 
very few. 

Q. What is the largest per cent your company ever paid to agents ? 
A. Our commissions are on the basis of twenty-five per cent and 
seven and a-half per cent; sometimes by reducing the renewals we 
have made it much larger, apparently on the first premiums ; some¬ 
times we have arranged the expenses of agencies by giving additional 
commission, but I can proudly state to you the standard commission 
has been twenty-five per cent, and seven and a-half on renewals. 

Q. Upon how many renewals? A. Depending entirely upon the 
contract. 


411 


Q. Well, on the average? A. Well, ten or fifteen years, as the 
case may be. 

Q. Twenty-five per cent on the first premium and seven and a-lialf 
per cent on renewals, not to exceed fifteen years ? A. I will not say 
not to exceed fifteen years, but I don’t think they would average ten 
years ; there might have been some fifteen, and seven and a-half, and 
on some we have allowed ten and five. 

Q. I am requested by a member of the committee to ask you 
whether the three and three-fourths (3%) millions you gave as the 
cost of the building, whether that included the building and land ? 

The Chairman —He testified it cost, in round numbers, four 
million dollars. 

The We pness —I so testified to-day ; I have sworn that the build¬ 
ing cost us that much. 

By Mr. Moak : 

Q. Don’t you know whether that amount was paid ? A. Why, 
that amount was paid ; do you suppose I would swear the building 
cost four millions if it cost two. 

Q. Did any person receive any portion—any person connected 
with the insurance company, receive any portion of the money, 
directly or indirectly ? A. Not one dollar. 

Q. Was there any arrangement that the builder should construct 
a house for you outside of that? A. No, sir; now, gentlemen, I 
state it under oath, and if you are going to take account of every lie 
and slander about every man, this committee is going to demean 
itself; a man that is successful has to pay the penalty, and it is of a 
peculiar kind; while a man who is unsuccessful has to pay a penalty 
of another kind; I have stated under oath that neither I nor any 
other man connected with the company has ever made a dollar oxit 
of the company, so help me God ! I am glad to refute it here in 
the insurance committee; I have been belied more than any other 
man in America. 

Q, Well, that is why I put you the question, and I thought if it 
were not so you ought to have an opportunity to explain it ? A. I 
am glad you put the question, and I am obliged to you for putting it. 

Q. That report was made? A. Yes, sir ; I have heard it for ten 
years. 

Q. That you had had a house built of stone out of it? A. Well, 
the house is of wood; I would like to state that if any substantial 
man outside of this committee dares to come and ask me this ques¬ 
tion or dares to ask me any of these questions, he will receive such 
treatment at my hands that he will never ask me them again; inside 
of this committee I will treat him decorously, but outside of this 
committee if he asks me this question either he goes down or I do. 

By Mr. Weiant: 

Q. Do your policies provide for the payment of a surrender value 
in them ? A. A great many of them do. 


410 


Q. Is it not a fact that for a certain number of years your com¬ 
pany guaranteed him $10,000 a year? A. No, sir; it is not worth 
$2,500 a year. 

Q. Any year ? A. No, sir. 

Q. To any of your officers have you guaranteed any particular 
sum? A. No, sir. 

Q. To any of your agents? A. We may have done so. 

. The (question is not what you may have done, but whether you 
did ? A. I cannot give you the exact facts in regard to it; we have 
paid some agents a salary, and some not. 

Q. What is the highest you have paid ? A I can't remember. 

Q. Can you approximate it ? A. I cannot. 

By Mr. Moody : 

Q. I understand you to say that you did not guarantee any salary 
to any agent? A. We do not now; I don’t think we have three 
agents in the country we do pay a salary to. 

By Mr. Moak : 

Q Mv question is, did you ever do so? A. Yes, sir; we did; in 
prosperous times, immediately after the war, and made a great deal 
of money by doing so. 


By Mr. Hale : 

Q. You saved a great deal of money by doing so ? A. Yes, sir. 
Q. You made more out of them than if you had paid them a 
salary? A. Yes, sir. 


By Mr. II USTED : 

$Q. If they had been paid a commission their receipts would have 
been larger? A, Yes, sir; but not in these times it would not; 
we would not think, in these years of doing it. 

Q. At the time when your company inaugurated the Tontine sys¬ 
tem, were any efforts made to induce parties who held life policies 
to change it to the Tontine system ? A. No, sir. 

Q. None whatever? A. No, sir; I don’t think I ever asked a 
person. 

Q. Did any one ask them ? A. No effort was made that way at 
all. 

Q. Was there not quite a large number that did change? A- A 
very few. 

Q. What is the largest per cent your company ever paid to agents ? 
A. Our commissions are on the basis of twenty-five per cent and 
seven and a-half per cent; sometimes by reducing the renewals we 
have made it much larger, apparently on the first premiums ; some¬ 
times we have arranged the expenses of agencies by giving additional 
commission, but I can proudly state to you the standard commission 
has been twenty-five per cent, and seven and a-half on renewals. 

Q. Upon how many renewals? A. Depending entirely upon the 
contract. 


411 


Q. Well, on the average? A. Well, ten or fifteen years, as the 
case may he. 

Q. Twenty-live per cent on the first premium and seven and a-half 
per cent on renewals, not to exceed fifteen years ? A. I will not say 
not to exceed fifteen years, but I don’t think they would average ten 
years ; there might have been some fifteen, and seven and a-half, and 
on some we have allowed ten and five. 

Q. I am requested by a member of the committee to ask you 
whether the three and three-fourths (3%) millions you gave as the 
cost of the building, whether that included the building and land ? 

The Chairman —He testified it cost, in round numbers, four 
million dollars. 

The Witness —I so testified to-day ; I have sworn that the build¬ 
ing cost us that much. 


By Mr. Moak : 

Q. Don’t you know whether that amount was paid ? A. Why, 
that amount was paid ; do you suppose I would swear the building 
cost four millions if it cost two. 

Q. Did any person receive any portion—any person connected 
with the insurance company, receive any portion of the money, 
directly or indirectly ? A. Not one dollar. 

Q. Was there any arrangement that the builder should construct 
a house for you outside of that? A. No, sir; now, gentlemen, I 
state it under oath, and if you are going to take account of every lie 
and slander about every man, this committee is going to demean 
itself; a man that is successful has to pay the penalty, and it is of a 
peculiar kind; while a man who is unsuccessful has to pay a penalty 
of another kind; I have stated under oath that neither I nor any 
other man connected with the company has ever made a dollar out 
of the company, so help me God ! I am glad to refute it here in 
the insurance committee; I have been belied more than any other 
man in America. 

Q, Well, that is why I put you the question, and I thought if it 
were not so you ought to have an opportunity to explain it ? A. I 
am glad you put the question, and I am obliged to you for putting it. 

Q. That report was made? A. Yes, sir ; I have heard it for ten 
years. 

Q. That you had had a house built of stone out of it? A. Well, 
the house is of wood; I would like to state that if any substantial 
man outside of this committee dares to come and ask me this ques¬ 
tion or dares to ask me any of these questions, he will receive such 
treatment at my hands that he will never ask me them again; inside 
of this committee I will treat him decorously, but outside of this 
committee if he asks me this question either he goes down or I do. 

By Mr. Weiant: 

Q. Do your policies provide for the payment of a surrender value 
in them ? A. A great many of them do. 


412 


Q. After the payment of more than one premium ? A. Generally 
after the payment of two; but I went over this matter; I would 
like to say one word here; in fact to tell a little story; it is a story 
Mr. Chairman, about Pat and the priest; Pat was the hostler of a 
village inn, and the people who visited, who passed by this locality 
often stopped to take their dinner and feed their horses at noon-time ; 
well, Pat was a very good man, and he went to the village priest 
every month to confess his sins and shortcomings, and his little gal¬ 
lantries ; and when he was there one time the priest asked him, 
“ Pat, did you ever grease the teeth of the horses when they came at 
noon, so that they could not eat the oats, and keep the oats in a bag 
and sell them?” “ No,” says Pat, “I never did that.” Well, Pat 
did a good deal of thinking during the next month, and when next 
Pat came to confess his sins, among other things he confessed that 
he had greased the teeth of the horses during the month, and had 
hidden the oats in a bag, and had them there ready to sell; I hope 
the contact I have had with your committee will not lead me to 
grease the teeth of all my horses. 

Adjourned until Wednesday, 9.30 a.m. 



N * 


415 


Wednesday, April 4. 

Tlie committee met on Wednesday morning, April 4, at nine 
o’clock. 

Present—The full committee. 

Henry Stokes sworn : 

Examined by Mr. Moak : 

Q. You are president of the Manhattan Life Insurance Company? 
A. Yes, sir. 

Q. How long have you been? A. Since 1860. 

Q. Hid your company present to the Legislature, in accordance 
with a resolution your report to the Superintendent to the Insurance 
Department, a statement of the salaries of the officers and employees ? 
A. I think there was a call upon us to make a statement of the 
salaries. 

Q. You made a statement before the time the resolution was 
passed ? A. Hot in detail ; the Legislature simply called for a 
statement and we responded to that call. 

Q. About what is the average loading of the policies in your com¬ 
pany ? A. I am not exactly prepared to state. 

Q. About what is the average per cent ? A. That is more par¬ 
ticularly the actuary’s duty in fixing the reserve and the loading. 

Q. I suppose you have some general informatics ? * A. It would 
be but a guess; I should say twenty per cent or thereabouts. 

By Mr. Moody : 

Q. On the gross premium ? A. Yes, sir. 

By Mr. Moak : 

Q. About what per cent of the gross premium is set aside for 
reserve ? A. It depends entirely upon the age of the party. 

Q. Say forty-five or fifty years old ? A. It is too much of an actu¬ 
ary’s question to go into now. 

Q. Can’t yon give an approximation ? A. The actuary keeps a 
detailed list of all the policies in existence, and reserve which applies 
to each policy, and on that we make our annual accounts; they are 
all embodied in one item. 

Q. As to the character of your investments; were any stocks 
changed substantially during 1876, from what they were in 1875 ? 
A. I should think they were. 

Q. Well, in what respect ? A. In shrinkage. 

Q. I am not speaking of the value, but the character; in other 
words, whether you changed materially, from the investments in one 
company to another company? A. Ho, sir. 


I 


416 

Q. You held substantially the same amount of stocks in 1876 that 
you did in 1875 ? A. Yes; when we make an investment we gen¬ 
erally keep it. 

Q. About how much had your company on bond and mortgage on 
the 31st of December, 1876? A. I couldn’t state it exactly. 

Q. Well, about how much, I say? A. I should think about four 
millions; I could tell. 

Q. Where was the property covered by the bonds and mortgages 
situated? A. In different localities, mostly in the city of Yew 
York. 

Q. The principal part of it was in the city of Yew York and 
vicinity? A. Well, I will correct what I said in regard to the 
amount. I see the amount loaned on bond and mortgage footed up 
$5,040,000 on the 31st day of December. 

Q. The principal part of it was in the city of Yew York and 
vicinity? A. We have recently rendered a detailed statement of the 
mortgages to the department. 

Q. Does your company have any home office? A. Yo, sir. 

Q* What rent does your company pay for its office ? A. I guess 
$11,000 a year, in that neighborhood, about that. 

Q. Do you hire offices elsewhere than in the city ? A. Yo ; we 
sometimes make an allowance to an agent; to a foreign agent. 

Q. To what extent? A. Very small. 

Q. How much was the aggregate paid by your company in 1876 
for office rent, including your home office ? A. Probably ($15,000) 
fifteen thousand dollars. 

Q. Fifteen thousand dollars would cover it, you think? A. Yes, 
sir. 

Q. What is your usual percentage allowed to agents on premiums ? 
A. Our usual per cent is twenty-five on the first premium, and from 
five to ten on the renewals; just as we bargain. 

Q. How many renewals ? A. It varies from three to ten years 
probably. 

Q. Yot to exceed ten ? A. We have some arrangement whereby 
we continue to allow a renewal commission as long as the policy 
exists. 

Q. What do you pay then ? A. They are old contractors; prob¬ 
ably the whole rate was ten or twelve per cent on the first pre¬ 
mium. 

Q. How much subsequently? A. From five to seven and a half 
per cent. 

Q. I am requested to ask you if you paid agents twenty-five per 
cent, how you managed to do it with a loading of only twenty per 
cent; you say the real loading was about twenty per cent; I take it 
the loading is the whole expense of the business ? A. The twenty 
per cent on the first premium being allowed them would be money 
coming in on the renewal. 

Q. So you expect to pay the excess on the commission of the 
agents out of the receipts for the renewals of the second and third 
year? A. Yes, sir. 

Q. Tell us what you understand by the term “ loading ?” A. I 


417 


consider tlie term “ loading” an actuary’s word, more as a way of 
getting at tlie proper reserve on the policy; he sets aside so much on 
the loading to carry that risk, and it is to cover all the expenses, but 
we don’t know any thing about loading; we get our premium and 
ask the actuary what would be the proper reserve on tlie policy— 
annual policy for example—and then we see what we have to meet 
it, and call tlie balance or excess a surplus applicable to dividend;. 
we do not divide everything up, but w'e show a large surplus, and 
make dividends which are satisfactory to the policyholders; instead 
of dividing everything up, we set something aside every year for 
contingencies; I think the term “ loading” is an actuary’s term par¬ 
ticularly. 

«/ 

Mr. Moody —I understand the term “ loading" to mean that 
which is set aside from the premium to pay all the expenses and cost 
of insurance; to pay every thing. 

Mr. Lang —The balance is the sum which the assured can look to 
to pay them their policies, I suppose. 

Mr. Moody —And in case the loading exceeds the expense, that 
excess is divided among the policyholders, and makes the dividends; 
that is the wav I understand it. 

t/ 

Mr. Weiant —Yes, it is a supposition that it is divided, but 1 
think the policyholders never get any benefit from the loading. 

By Mr. Moak : 

Q. Let me ask you this cpie'stion: some of these companies seem 
to have a difference between the loading and balance of the premium 
of some ten or fifteen per cent; in your company what is the prac¬ 
tice ; do you call the reserve every thing except the loading; is 
there any per centage; in other words, take this case for example : 
you insure me at forty-five for $5,000, and charge me $200 a year, 
of course; now your loading would be forty dollars on that, would 
it? A. Yes, sir, twenty per cent. 

Q. And would you invest the $160 as reserve, or would you in¬ 
vest only a portion of it as the reserve ? A. We invest every thing 
we have got left. 

Q. As the reserve on my policy ? A. Every thing; we don’t 
divide every thing. 

Q. Is that the rule in your company ? A. T es, sir. 

Q. The reserve in your company consists of the. entire premium, 
less the loading ? A. Less the expense of the business. 

Q. I want to know whether the loading covers the entire expense 
of the business, or whether, in certain contingencies, the expense 
goes beyond it ? A. I suppose it is intended to cover it, but there 
are many things it could not cover ; for instance, such tilings as loss 
of investments, contingencies generally. 


\ 


418 


Q. I suppose this loading was intended to cover the contingencies % 
A. It is estimated that that would do it. 

Q. 1 want to know what you call the reserve proper; there is a 
sum called the reserve, is there not ? A. Yes, sir. 

Q. That is a sum which, calculated at four per cent compound 
interest, according to the American mortality tables, would cover 
the policy? A. Yes, sir; with interest compounded to it. 

Q. That is the legal reserve? A. Yes, sir. 

Q. Do you call the legal reserve the amount of the premium, less 
the loading, or, in other words, take this case: you are going to re¬ 
insure me at forty-five for $5,000 during my life, and you are going 
to charge me $200 premium, would you first ascertain the amount 
which, invested annually according to the mortality tables, would 
equal my policy ; I suppose that you would do first, in order to get 
the annual premium, you would charge me? A. Yes; our annual 
premiums are tables stereotyped. 

Q. I want to know how you would get at the amount of the 
table ? A. That is the actuary’s business. 

Q. But you have some knowledge of it, have you not, in your 
company? A. Yes, sir. 

Q. In order to determine the amount you "would require annually 
as a premium, would you get at the amount of the reserve which,, 
invested at four and a half per cent, would, at the time the amount 
is supposed to become due according to the American tables, equal 
the policy ? A. I think that would be the proper way. 

Q. Would you add to that twenty per cent for loading ? A. As I 
said before, that would naturally be determined by the proper 
amount to be allowed for the expenses. 

Q. Would you add anything else to it? A. If that loading would 
cover the whole expenses, we would not. 

Q. I want to know how you would get at the premium in my 
case? A. Well, I don’t see how the contingents could be got at. 

Q. I want to know whether your company charges or intends to 
charge, as a rule, a premium in excess, in any case, of the legal 
reserve as we have defined it, and the loading as the actuary deter¬ 
mines it ? A. Our experience is we do charge an excess. 

Q. About how much excess is the rule; what amount of excess ? 
A. The amount we return to policyholders would be one item. 

Q. Well, is there not some general per cent that you charge in 
excess of the legal reserve and loading ? A. Only from experience 
of the business. 

Q. Well, how much, according to the experience of the business : 
A. We are returning to the policyholders from sixty to fifteen per 
cent on their premium. 

Q. Then you charge the policyholders the legal reserve the load¬ 
ing, and irom fifteen to sixty per cent in addition ? A. Yes, sir. 

By Mr. Husted : 

Q. Which you return in the shape of dividends? A. Yes; we 
return it in dividends, annually. 


419 


By Mr, Wei ant : 

Q. Why not load to a less extent, and let the policyholder retain 
it, instead of it paying it back to him in dividends ? A. It is desired 
to keep the company strong in all cases. 

Q. You would appropriate it for other purposes if necessity re¬ 
quired ? A. Of course we would appropriate it to meet any loss 
that might arise. 

Q. Then if there should be any thing lost, the policyholders would 
not get it ? A. Why, if it was lost, they couldn’t get it; it would 
be appropriated to the requirements of the dividends. 

Q. Tf you should expend it in the business, there would be no divi¬ 
dends then ? A. No, sir. 

By Mr. IIusted : 

Q. Well, if you should have an epidemic, and you should lose half 
your policyholders, there would be no dividend, would there ? A. 
No, sir. 

Q. Because there would be no money to pay them ? A. That is it. 

By Mr. Moak : 

Q. This excess to the policyholders is to provide against the con¬ 
tingencies of the business? A. Yes ; we charge for insurance more 
than it is worth, and hope to save all the time. 

Q. You calculate to have enough in the treasury of the company 
to meet any contingencies that might arise? A. Yes, sir. 

Q. I see in your published reports for 1875, you report the gross 
surplus on the policyholder’s account, $1,972,280,49; was there that 
surplus in the treasury of the company at the time in addition to the 
dividends divided to the policyholders that year ? A. That is the 
understanding. 

Q. In addition to what is divided to the policyholders? A. Yes, 
sir. 

Q. Do you show how much was divided to the policyholders ? 
A. Yes , sir. 

Q. You paid, in addition to that, a dividend to the policyholders 
of $92,038,03 ? A. Well, I have not the figures before me, but you 
have it in the report. 

Q. Well, that is as I read the figures; are those figures correct? 
A. Yes ; and that is probably the case. 

Q. Well, then you have here “amount of unpaid dividends, 
$2018.95?” A. Yes, sir. 

Q. Would those tw r o items represent all the surplus which was in 
the treasury of your company in 1875 ; the items of gross 'surplus 
and the items of dividends that year? A. The dividends that year 
to be paid? Q. Yes. A. They are all deducted from the surplus. 

Q. I ask you would those two items represent the aggregate of the 
surplus in the treasury of the company ? A. No, I think not. 

Q. Well, what additional surplus would there be beyond those 
two? A. That is the appropriated fund; we should have a surplus 
without that. 

27 


420 


Q. You give the gross surplus at $1,972,280,49, you say in ad¬ 
dition to that you pay in dividends to policyholders $92,038,03, both 
of those were in the treasury on the 1st day of January, 1876, were 
they not ? A. If I understand the question, that is so. 

Q. Well, would those two items represent the entire surplus in the 
treasury of the company at that time ? A. No, 1 should think not. 

Q. Well, where would there be an additional surplus in addition 
to those two items? A Those are deducted from the surplus. 

Q. Well, now, let me see if you cannot understand this; how 
much was the entire surplus ? A. One million nine hundred and 
seventy-two thousand two hundred and eighty dollars and forty-nine 
cents. 

Q. Well, that represented the entire surplus? A. Yes, sir; be¬ 
yond the legal reserve. 

Q. And from that was to be deducted the amount of dividends 
you paid during the year ? A. No, sir ; we have that independent 
of them. 

Q. Then it comes right back to where I started ; do the two items, 
$92,038,03 and $1,972,280,49, represent the aggregate of the surplus 
in the treasury of the company on the 1st day of January, 1876 ? 
A. I do not suppose they are connected at all. 

Q. Well, is there any way by which you can determine it from 
the annual report what the aggregate of the surplus was ? A. Only 
as stated, $1,972,280,49; after paying matured claims and those 
which are not yet due ; that is deducted from the surplus. 

By Mr. Moody : 

Q. As I understand you it is this: it means just what it reads; 
the amount of all unpaid dividends on policies was $92,038.03 placed 
to their credit ? A. Yes. 

Q. Then there was an unpaid dividend to stockholders of $2,832, 
which, together with the amount of claims, $345,057, and the 
amount you have invested for the benefit of policyholders, according 
to the table of mortality, $7,565,284, made the total amount of liabil¬ 
ities; then you had a gross surplus over and above that of this 
$1,972,280.49? A. Yes, sir. 

By Mr. Moak ? 

Q. I so understood it, but as you answered it you changed my 
opinion ? A. That is correct as it is now read. 

Q. Then the entire amount of funds which your company had, in 
surplus or otherwise, on the 31st of December, 1875, was $9,977,473- 
17? A. Yes, sir; about that . 

Q. Is your company a stock company or mutual ? A. Both ; we 
have $100,000 worth of stock capital, but we do business on the 
mutual plan. 

Q. Do the policyholders have any vote in the company? A. Yes. 

Q. In the choice of directors ? A. Yes, sir, they are eligible. 

Q. In what way ? A. Every policy that pays an annual premium 
of seventy-five dollars is entitled to one vote. 


421 


Q. Does each policyholder cast one vote simply, regardless of what 
bis policy is in fact ? A. Yes, sir. 

Q. But the minimum is an annual premium of seventy-five dol¬ 
lars? A. Yes, sir. 

Q. What did you say the capital stock was ? A. One hundred 
thousand dollars. 

Q. About what per cent have you divided to the stockholders ? 
A. On an average of late years of fifty-five per cent. 

Q. I am speaking of stockholders? A. Well, fifty-five per cent 
<on the capital stock. 

Q. 1 ou do not mean that every man who has $100 worth of stock, 
you pay him fifty-five dollars ? A. About that. 

Q. For how long have you paid that rate of dividends to stock¬ 
holders ? A. Probably five or six years. 

Q. What had been the dividend to stockholders previous to that ? 
A. The charter allows us to pay stockholders the interest on stock 
rat seven per cent and one-eighth of the net profits, whatever it 
amounts to. 

Q. How long has your company been in existence ? A. Since 1850. 

Q. How soon after the company was organized did you first be¬ 
come connected with it ? A. I was connected with it when it first 
started. 

Q. In what capacity \ A. As director. 

Q. How soon after it was organized did you pay the first dividend? 
A. The dividends were triennial, once in three years. 

Q. About what per cent was the dividend paid in the first three 
years ? A. I think it was about eight per cent. 

Q. Eight per cent every year ? A. Per annum for the first three 
years; no, it was eight per cent for the three years’ dividend ; we 
divided that triennially. 

Q. You mean eight per cent for the three years ? A. Yes, sir. 

Q, The next dividend was declared how long after that ? A. Three 
years. 

Q. What was that dividend ? A. I couldn’t tell you; I received 
it, but it is so long ago— 

Q. Can’t you tell about what was the second dividend ? A. I 
think the second dividend was equal to eight per cent a year ; about 
twenty-four per cent for the three years. 

Q. Since that, down to the time you began to pay about fifty-five 
per cent, about six years ago, what would be the average ? A. It 
averaged about eight per cent per annum and interest, and seven per 
cent interest on the capital and eight per cent dividends. 

Q. Well, that would make about fifteen per cent? A. That is so, 
as near as 1 can recollect. 

Q. Did it exceed that until it took the jump to fifty-five per cent ? 
A. Yes ; it grew gradually until it got to ten per cent quarterly, and 
at the end of the year we had a surplus dividend of perhaps ten dr 
fifteen per cent. 

Q. Then it must "have paid as high as thirty per cent for five or 
six years before it became fifty-five ? A. About twenty-five per cent. 

Q- And in about how large blocks is the stock held ; who is the 



422 


largest stockholder ? A. Well, the largest stockholder is a gentle¬ 
man by the name of Kerr; he died within a year. 

Q. How much did he own 1 A. He held in the neighborhood of 
$15,000 ; from twelve to fifteen thousand. 

Q. How much do you hold ? A. Less than $5,000 now. 

Q. Is that the most you have ever held ? A. I think I have held 
as high as $6,500. 

Q. Hot to exceed that ? A. Ho. 

Q. Was there any held by any other member of your family ? A. 
Yes; I have a brother that holds $1,000. 

Q. I want to get a general idea whether it is held in large sums, 
so that your family has the controlling interest? A. Well there are 
only two that has a larger amount than myself. 

Q. Well, with the exception of Mr. Kerr, who is the other ? A, 
Mr. Yan Schaack. 

Q. How much does he hold ? A. Five thousand dollars. 

Q. Is any member of your family connected with the company 
either as an officer or employe ? A. Yes, I have a son in the office. 

Q. What is he ? A. Assistant secretary and cashier. 

Q. What is his salary ? A. Five thousand dollars. 

Q. Any thing beyond that ? A. The board, as has been their cus¬ 
tom, makes a small Hew Year’s present each year. 

Q. About how much ? A. Five hundred dollars. 

Q. Hot to exceed that ? A. Ho, sir, 

Q. Is any other member of your family connected with the busi¬ 
ness? A. Ho, not in the business. 

Q. Well, what do you mean ? A. I have a nephew who is a. 
director. 

Q. But not receiving a salary only such as you pay directors for 
occasional attendance ? A. That is all. 


By Mr. Weiant : 

Q. Out of what fund is the $500 paid that you say is a Hew 
Year’s gift ? A. Out of the same fund that we pay the adver¬ 
tising. 

Q. What fund do you call it? Q. We do not call it any name; 
we simply draw a check for it. 

Q. Does it not come out of the loading ? A. I take it as one of 
the expenses of the business. 

Q. Does it not come out of the loading? A. I don’t know that 
we have any fund of that kind. 

Q. Do you mean to say you have no loading ? A. I don’t know 
that we have any fund of that kind ; we know nothing of that kind. 

Q. You load the premiums, don’t you ? A. Ho. 

Q. The company don’t load it at all? A. Ho, the actuary does 
that. 

Q. Your company loads, then, don’t it; the actuary is an officer 
of your company, isn’t lie ? A. Yes, sir. 

Q. Then your company does the loading, don’t it? A. Well, 
that is a mere figure; you asked me what fund I took it from. 


423 


Q. Well, I want to know whether you load the premiums ? A, 
The actuary loads them, but that is arbitrary. 

Q. Who does he act for? A. Why, for the company, of course. 

Q. Now, your company loads the premiums, don’t they, then; 
you say there is a loading of about twenty per cent ? A. They first 
get the net premiums, and then they add an addition that they call 
loading; our actuary computes according to the mortality table the 
actual cost of insurance. 

Q. Then you add to that a certain per cent which you term load¬ 
ing, to cover the expense of running the company, don’t you ? A. 
Yes, sir. 

Q That is correct, is it? A. Yes, sir. 

Q I ask you whether this $500 is paid out of that loading which 
you add to the premiums ? A. Well, it must be, because it is an 
expense to the company. 

Q And it takes that much from the reserve to that extent, doesn’t 
it ? A. No, the reserve is independent of that. 

Q. Well, of the surplus? A. Yes, sir. 

Q. And to that extent it takes that amount from the policy¬ 
holder ? A. Well, yes sir. 

Q. And so every thing of that kind decreases the policyholders’ 
dividends ? A. Yes, of course. 

Q. Well, how do you compute what dividends to declare to the 
policyholders ? A. The actuary tells by his figures what the reserve 
must be to cover every risk that is out; he claims that amount. 

Q. He determines the reserve on each of the risks that is out ? 
A. Yes, altogether; then we find out what we have on hand to pay 
the risk, and then what we have as a balance over that we call a 
surplus. 

Q. Well, isn’t the policyholder interested in that? A. Yes, cer¬ 
tainly. 

Q. Don’t they get their dividends out of that ? A. Why, 
certainly. 

Q. Well, how do you determine the amount you pay in dividends 
to stockholders; do you determine that arbitrarily ? A. Some¬ 
what. 

Q. You determine that your company can safely take so much out 
to pay the policyholders ? A. Yes, to make an equitable division. 

Q. And whatever you take out of the dividends for the stock¬ 
holders, it reduces the dividends that much to the policyholders ? 
A. No; when we determine our profits we set aside one-eiglith of 
that for the stockholders. 

Q. Well, how do you determine what your profits are ? A. I 
told you we first determine the reserve and then what the sur¬ 
plus is. 

Q. And then you set aside one-eighth ? A. \ es, we set aside 
one-eighth of that for the stockholders, and that is their dividend, 
and the balance of that is a surplus applicable for dividends to the 
policyholders. 

Q. How long has it been usual for you to pay one-eiglitli of the 
profits to the stockholders ? A. It has been our invariable rule. 


424 


Q. All the way through ? A. Yes; that is the terms of the* 
charter. 

Q. That is a rule that has never been changed ? A. The charter 
provides that after determining the profits, one-eighth shall be paid 
to the stockholders. 

Q. What do you call profits? A. Well, the surplus beyond the- 
proper reserve accumulated during the year. 

Q. Do you mean to say that the payment of that dividend to the 
stockholders does not reduce or depreciate the dividends to the poL 
icyholders? A. If the policyholders got all the profits they would 
have the whole thing; but if we take out one-eighth of the profits- 
for the stockholders, of course it reduces their dividends to that 
extent. 

Q. Then it does reduce the dividend to the policyholders ? A.. 

Yes, of course it does. 

By Mr. Moak : 

Q. You said the secretary was usually voted a bonus at the end of 
the year of some small amount ? A. I did not say the secretary- 
alone. 

Q. Do your directors usually vote bonuses for the other officers 
of the company ? A. It has been the habit for years back that at 
the end of January or beginning of February to vote all the clerks 
a small addition to their salaries. 

Q Does it include all the officers? A. Ho, it is confined to the- 
assistant secretary and the clerks. 

Q. Have you more than one assistant secretary? A. Yes, two. 

Q. Each of them gets a small bonus ? A. Yes, it is a percentage- 
on their salary ; I think it is ten per cent. 

Q. In other words you pay, for instance, the secretary $5,000 £ 
A. Yes, sir. 

Q. That is supposed to be his annual salary ? A. Yes, sir. 

Q. And at the end of the year you vote him ten per cent, in 
addition to whatever he has received ? A. That is the usual course- 

Q. That you do with all your clerks? A. Yes, with those who 
hold minor positions. 

Q. Well, why not fix it at a salary ? A. It is not thought wise to- 
fix it in that way; it was brought into vogus by the excessive 
increase in the expense of living; the idea of increasing the salary 
was considered, but it was deemed unwise ; we thought the salaries- 
were as high as they should be, and it is far easier to put them up 
than down; consequently, instead of increasing salaries, we give 
them a small present at the end of the year, and that will probably 
be discontinued now. 

Q. How long has the salary of the secretary been $5,000 ? A.. 

About one year. 

By Mr. Lang : 

_ • 

Q. I want to know by what authority or right this company make?' 

an addition to the clerks’ salaries at the end of the year for past 


425 


services, over and above the contract entered into ? A. We supposed 
we had a right to divide the funds of the company in the discretion 
of the directors, to pay them what they are worth. 

Q. Well, is there any thing to prevent you giving them $10,000 
each, if you thought lit ? A. We have the right to do what we 
consider wise and discreet. 

Q, Every policyholder has an interest in the company, has he not? 
A. Why, yes, sir; but they have the remedy in their own hands, if 
they don’t like it. 

Q. What remedy ? A. Why, they can turn us out. ’ 

Q. But that don't get their money back, does it, if you have given 
it away ? A. Well, if we don’t manage their affairs properly, they 
will turn us out; you can make your mind easy on that point. 

Q. Well, but you have got the best of them now, haven’t you? 
A. Well, yes sir, perhaps so. 


By Mr. Moak : 

Q. Now, in your statement to the Senate, as I understand it, in 
accordance with their resolution, you stated that the amount of 
salary paid to the president was $10,000, and he got a bonus in 
addition to that of $5,887.57 ? A. Yes, sir. 

Q. Making in all $15,887.57? A. Yes, sir. 

♦ Q. Well, in what way was that amount arrived at—the additional 
sum beyond the ten thousand ? A. It was a per centage on the net 
profits. 

Q. What per centage was it ? A. There was a certain per centage 
divided between the president and vice-president, the secretary and 
the actuary. 

Q. What per cent did the president get of the net profits ? A. I 
can hardly answer the question ; it was over one per cent and a 
fraction ; but what it was I can’t exactly say. 

Q. Well, why was it not made one per cent, or one and a quarter, 
or one and a half ? A. I think it was two and a half per cent of the 
net profits that was allowed to be divided among certain officers; a 
certain per centage to each. 

Q. About what proportion did the president get ? A. I cannot 
tell you. 

Q. Well, can't you tell me about what ? A. If the president got 
$5,600 the vice-president got $2,300 ; it was all proportioned in that 
way. 

Q. The vice-president got $2,355.03 in addition to his regular 
salary, did he ? A. Yes, sir. 

Q. Was the president or any officer of the company during the 
year 1876, allowed, directly or indirectly, from any assets of the 
company, or any thing that came from the assets of the company, 
any thing in addition to the bonus which you state here as being 
paid to them ? A. Nothing whatever. 

Q. About how long has the salary of the president been $10,000 ? 
A. About six or seven years. 

Q. Has it ever been to exceed $10,000 ? A. Never. 

. ✓ , 1 

. ' ■ V" > . , •- 


426 


Q. Has there ever been a time when the bonus paid to the presi¬ 
dent, or any of the officers, exceeded the bonus paid to the same 
officer during the year 1876? A. Hot very much. 

Q. Well, how much? A. A few hundred dollars, probably. 

Q. Hever has exceeded that ? A. It has averaged less, on the 
whole. 

Q. What was the aggregate bonus paid to the officers during the 
past year ? A Twelve thousand nine hundred and fifty two dollars. 

Q. That was in addition to their salaries ? A. T es, sir. 

Q. I see the regular salary of the medical examiner was $5,000 in 
1876, was it not? A. I think that was the salary. 

Q. And he was paid a bonus of $4,226 ? A. Ho, he was not paid 
any bonus ; that was paid to other medical examiners. 

Q. Was the medical examiner paid any extra compensation ? A. 
Ho, sir. 

Q. Has he ever been ? A. Hot that I am aware of. 

Q. Who is your regular medical examiner ? A. Dr. De Boyce is 
the medical examiner of the company, whose duty it is to attend in 
the office daily ; but sometimes he goes out to make an examination 
and may have received something for that. 

Q. You say that policyholders are allowed to vote in your com¬ 
pany ? A. Yes, sir. 

Q. To what extent do you hold proxies from policyholders? A. 
I don’t think I have ever voted on one policy. # 

Q. I don’t ask you how many you voted on ; I ask you, how many 
do you hold ? A. I hold no proxies from policyholders. 

Q. Is there any one connected with the company that does hold 
them? A. Hot that I am aware of. 

Q. You are not aware of the fact, as president, that any officer of 
the company holds proxies to vote on the policies of insurance ? A. 
Ho. 

Q. Is there any person not an officer—for instance, a director or 
friend of the company—that holds any number of proxies ? A. Hot 
that I am aware of. 

Q. Any person of any hind ? A. I don’t know of proxies being- 
held by any individual. 

Q. Hot one? A. Ho. 


By Mr. W eiant : 

Q. In 1876 there appears to have been an aggregate bonus made 
to officers of about $12,952, according to my computation ; out of 
what fund was that bonus paid ? A. Out of the general fund. 

Q. The surplus ? A. Out of the funds of the company; it would 
show itself in the computation of the profits at the end of the year; 
there would be that much less profits out of the business at the end 
of the year; the undetermined profits of the business, you might 
say. 

Q. Does the payment of that sum to the officers to that extent 
depreciate the dividends to the policyholders? A. Well, it takes 
that much money from the company’s profits. 


427 


Q. I ask you whether the payment of that sum to the officers 
would depreciate to that extent the dividends to the policyholders ? 
A. I should say not to that extent. 

Q. Why not to that extent ? A. Because the stockholders have 
some interest in the profits. 

Q. In what way ? A. They are interested in the profits ; it comes 
from the funds applicable to the profits; the policyholders get seven- 
eighths (7-8) and the stockholders one-eighth (1-8). 

Q. 1 ou mean to say it depreciates the dividends to the policy¬ 
holders and stockholders both? A. It is not taken from the ascer¬ 
tained profits; it is taken from the funds of the company ; at the 
end of the year the company woidd show that much less profit from 
which it was taken. 

Q. It is taken from the funds from which the computation of the 
dividends is made, is it not ? A. Ho, because there is no computa¬ 
tion of the amount of the dividends. 

By Mr. Moody : 

Q. That amount would be in the surplus ? A. If we did not 
divide it it would be in the surplus for the purpose of the dividends. 

By Mr. W eiant : 

Q. Would it not go to make a fund out of which the dividends 
tRe policy and stock holders is made ? A. It would participate in 
that fund. 

Q. And if this $12,952 was taken out it would be that much less? 
A. Well, it would be the same as if we took the clerk’s salary out of 
it; it would reduce the surplus. 

Q. You would* call it an expense if you voted yourself $10.000,1 
suppose? A. Yes, sir. 

Q. And that amount taken out would depreciate the dividends of 
the policyholders and stockholders ? A. Precisely the same as it 
does when you pay the rent of the office; if you could do business 
without expense there would be all surplus. 

Q Does it depreciate the dividends to the policyholders and stock¬ 
holders ? A. Why, of course it does; I told you the same as if you 
paid rent. 

By the Chairman : 

Q. What is the number of cases litigated by your company, say 
for three years past, on an average each year ? A. I could not give 
you the exact amount. 

Q. Well, about how much on the average? A. How many cases ? 

Q. Yes, how many cases, and the aggregate amount involved in 
them? A. For three years? 

Q. Yes? A. Well, I should think they might have had six or 
eight cases; ten cases—along there ; ten suits probably. 

Q. In all, do you mean ? A. In all, in three years. 

Q. And an aggregate in all would amount to about how much ? 
A. Well, runnbig from two (2) to $10,000 risks. 


428 


Q. Each? A. Yes, sir; they would average four or five thou¬ 
sand—five thousand, say; 1 am stating now entirely from memory y 
which is not very clear as to the amount of the policies or the cases; 
we have had a great many cases South, where the policies lapsed dur¬ 
ing the war. 

Q. What was the amount of your foreclosures last year ? A. I 
think we bought in last year $200,000 worth. 

By Mr. Wei ant : 

Q. What was the aggregate amount of the money loaned; what 
was their face value ? A. About the amount we purchased it in for, 

Q. Can you give us the amount? A. Well, the real estate cost 
$206,851. 

Q. That is what the real estate cost you ? A. Yes, sir. 

Q. What was the face value of the mortgages and interest on 
those mortgages under which you bought in this property ? A. I 
think that represents it exactly; we probably bought it in at a less 
figure. 

Q. Well, I want to know whether you did or not ? A. Well, w r e 
sometimes do not bid up to the amount, and we charge it as it stands 
on the book, with all the expenses piled on to it; the amount shown 
here as owing on real estate is what it cost us, interest and expense 
added. 

By the Chairman : 

Q. Do you know how the amount of these mortgaged claims and 
interests and expenses compared with the appraised value of the 
property originally ? A. We never loan over half the appraised 
value 

Q I mean when you bought it in with the interest and expenses 
added, how much then did it compare with the appraised value? A, 
Well, we find it very difficult to make an approximation readily. 

Q. It would still come within the original appraised value, I 
mean ? A. Our loans were made at half the value as appraised. 

Q. Then were the interests and costs added; were they still within 
the appraised value when you bought them? A. Well, they would 
be in some cases ; in some cases they are thought to be worth more 
than that; do you mean the present value ? 

Q. You had them appraised when you made the loan ? A. Yes 7 
sir. 

Q. And the amount at which you bought them in was the amount 
of the claims at the time of the purchase ? A. Yes, sir. 

Q. Well, I ask you was that still within the original appraised 
value ? A. With the expenses, interest and costs of foreclosure ? 

Q. Yes; that was my question ? A. Well, I think it would ex¬ 
ceed the appraised value; that is, half the appraised value that we 
loaned. 

Q. Do you consider the property worth to-day what it cost you 
under these foreclosures ? A. Yes ; we consider it so. 

Q. Have you sold any of it since the purchase ? A. Ho, sir 


429 


there is no market for it; we could not tell what it would bring to 
sell it to-day. 

Q. What has been your experience as to the safety of loans within 
or without the State—I mean the comparative safety ? A. We pre¬ 
fer^loaning our money near home to going abroad ; we would sooner 
loan in the city of New York than outside of it, or even across the 
river. 

Q- I say within or without the State; in New Jersey, for instance, 
within titty or sixty miles? A. I don’t think we would loan it out 
of the State, with our experience. 

Q. You would not loan out of the State? A. We have loaned r 
but we will not do it hereafter. 

By Mr. Moak : 

Q. What reason have you for that? A. Well, I think we are not 
as well posted in regard to the laws of the different States. 

Q. You are more liable to be imposed upon by excessive valua¬ 
tion ? A. Well, we have to get some one to value it for us, and we 
like to see our own property before we loan on it. 

Q. You would not regard loans outside the State as safe as if they 
were made where you can get yourself personal information of the 
property, or information from persons who know about it? A. They 
may be as safe, but we don’t like them. 

By the Chairman : 

Q. To a reasonable extent, would you not have as much knowl¬ 
edge of the property as you have of property in the city of New 
York? A. Yes, sir, perhaps so ; but if we can loan our money in 
New York, we prefer to put it there. 

By Mr. Moody : 

Q. Suppose you have a chance to loan money in Westchester 
county or in Newark, which would you do? A. Why, we would 
prefer Westchester county. 

By Mr. Moak : 

Q. Suppose it was in Albany county or within fifty miles of New 
York in New Jersey? A. We might get just as good security in 
New Jersey as we would in New I ork, but we wouldn’t know the 
property as well; I think every locality can take care of itself, and 
for my part, I prefer loaning at home. 

By Mr. Moody : 

Q. At your last election were there any proxies that cast votes l 
A. There might have been some stock proxies. 

Q. But were there any policy proxies ? A. No, sir. 

Q. None whatever ? A. No, sir; I think I have stated that I 
don’t know of a proxy existing anywhere to vote on a policy; I 
have never seen one; policyholders, as a general thing, don’t vote. 


430 


Q. They have the right to vote? A. Yes, sir; the election is ad¬ 
vertised in the usual course, according to law, but very few avail 
themselves of it. 

By Mr. W eiant : 

Q. Do you know the nature of the defenses in any of the litigated 
cases in this State ? A. What, against policy claims ? 

Q. Yes; the defenses that your company has interposed? A. 
Well, suicide is a very usual defense; we have some cases in the 
Southern States where the policies lapsed during the war. 

Q. Well, I mean in this State? A. We never have any defense, 
except misrepresentation on the part of the party, fraud and suicide ; 
those are only defenses. 

By the Chairman : 

Q. You pay commissions, I understand it, for a certain rate which 
you give. Where the agent takes an entire paid-up life policy and 
gets the entire premium in one payment, which is done sometimes, 
is he allowed a commission just the same, twenty-five or thirty per 
cent on the whole amount, as if he was taking the premium for a 
single year? A. Well, that is a very rare case; I don’t know what 
it would be; I think it would be a matter of negotiation under those 
circumstances. 

Q. You don’t have a fixed rule in such cases? A. No, sir; very 
rarely they occur. 

Q. It would very rarely occur that such payments are made for 
the entire life policy? A. Yes, sir; very rarely occurs. 

Q. Have you known a case of litigation being threatened against 
the company for the purpose, as you may think of extorting pay 
from them to quiet them, either with your own or other companies ? 
A. What do you mean, suits instituted against the company? 

Q. Yes, or threatened against your company or others ? A. Upon 
what grounds ? 

Q. Upon the grounds which you might or not consider well founded 
for the purpose of extorting money to quiet them ? A. No, I don’t 
know as we have. 

By Mr. Moak : 

Q. What I understand the chairman to mean is, whether there 
have been any cases, so far as your company is concerned, or other 
companies, where suits have been commenced for the purpose of 
blackmailing ? A. No ; I don’t know that we have ever been sued. 

By Mr. W eiant : 

Q. Your company is not represented in the Chamber Of Life 
Insurance, is it? A. No, sir. 

Q. And is not in any way connected with it ? A. No, sir. 


431 




Manhati'an Life Insurance Company, located in Hew York 
City. [Organized August 1 , 1850 .] 


Henry Stokes, President. 


Jacob L. Halsey, Secretary. 


I. — Capital, 

Capital stock paid, $100,000. 

II.—Income during 1876. 

Cash received for premiums,without deductions, $1,180,538 02 
Premium notes, loans or liens taken in part pay¬ 
ment for premiums, . . . 93,227 04 

Cash received for annuities, . . 11,666 11 


Total premium income, 

Interest upon mortgage loans, 

Interest on bonds and dividends on stock, 

Interest on premium notes, loans or liens, . 
Interest on other debts due the company, 

Discount on claims paid in advance, . 

Profits on bonds, stocks or gold sold, 

Collections from suspense account. 

Total income during the year, 

Balance of net or ledger assets December 31, 1876, 

Total, ..... 


$1,285,331 18 
321,994 71 
53,187 50 
128,819 05 
46,634 35 
1,529 21 
5,264 14 
434 52 

$1,843,194 66 
9,328,320 69 

$11,171,515 35 


III.—Disbursements during 1876. 

Cash paid for losses and additions, . $637,669 36 

Premium notes, loans or liens, used in payment 

of same, ..... 49,452 75 

Cash paid for matured endowments and additions, 57,639 60 
Premium notes, loans or liens, used in payment 

of same, ..... 25,945 40 


Total amount actually paid, .... 

Cash paid to annuitants, ..... 

Cash paid for surrendered policies, .... 

Premium notes, loans or liens used in purchase of surrendered 
policies, and voided by lapse, . 

Cash dividends paid to policyholders, 

Premium notes, loans or liens used in payment of dividends 
to policyholders, ..... 

Total paid policyholders , . . $1,298,113 36 

Cash paid stockholders for interest or dividends, 

Cash paid for commissions to agents, 

Cash paid for medical examiners’ fees, . 

Cash paid for salaries and other compensation of officers and 
other office employees, ..... 

Cash paid for taxes, ...... 

Cash paid for rent, ...... 


$770,707 

11 

3,704 

99 

98,369 

27 

134.269 

71 

271,356 

54 

19,705 

74 

55,000 

00 

121,153 

02 

9,226 

00 

70,452 

66 

8,931 

51 

14,500 

00 


t 







432 


Clash paid for commuting commissions, 

Cash paid for advertising, ..... 

dash paid for the following items, viz : Expenses on real es¬ 
tate, law, agency and office expenses, 

Total miscellaneous expenses, $308,564 24 


410 42 
9,576 01 

19,314 62 


Total disbursements during the year, 



$1,606,677 60 


Balance December 31, 1876, 

t 


$9,564,837 75 


Invested in the following: 


IV. — Assets , as per Ledger Accounts . 

Real estate, unincumbered, cost value, 

Loans secured by mortgage on real estate, first liens, 


$206,851 56 
5,040,160 29 


Loans on Stock Collaterals. 


Par value. Market value. Amount loaned. 


District of Columbia bonds, . $40,000 00 

United States bonds, . . 1,000 00 

Western Union Telegraph Co. stock, 30,000 00 
•Citizens Fire Insurance Co. stock, 6,300 00 

Jersey City bond, . . . 4,000 00 

Brooklyn City Water loan, . 1,000 00 

United States bonds, • , 1,000 00 

Western Union Telegraph Co. stock, 210,000 00 
Lake Shore Railroad stock, . 50,000 00 

Union Pacific 1st mortgage bonds, 80.000 00 
-Central Pacific 1st mortgage bonds, 20,000 0.) 
N. J. Cent. 1st mort. bonds, . 15,000 00 

Lake Shore sinking fund bonds, 15,000 «>0 

N. Y. Central and H. R R. stock, 20,000 00 

Continental National Bank stock, 3,700 00 

Lake Shore Railroad stock, . 10,000 00 

Metropolitan Bank stock, . 2,000 00 

Merchants’ Exchange Bank stock, . 8,00 00 

Bank of the Republic stock, . 4,500 00 

Citizens National Bank stock, . 9,750 00 

Eighth Avenue Railroad stock, 3,100 00 

Broadway Bank stock, . . 4,500 00 

Citizens Bank stock, . . 1,325 00 

Lake Shore Railroad stock, , , 10,000 00 

N. Y. Central and H. R. R. stock, ' 50.000 00 
Westchester County bonds, . . 1,000 00 

N. Y. Central and H. R. R. stock, 50,000 00 
Harlem preferred stock, . . 15,000 00 

N. Y. Guaranty and Ind^m. Co. stock, 1,000 00 
N. Y. Central and H. R. R, stocc, . 150,000 00 
Harlem Railroad stock, . 49,500 00 

Union Trust stock, . . . 10,600 00 

Butchers and Drovers Bank stock, 26,625 00 
Westchester County bonds, . 15,000 00 

Citizens National Bank bonds, . 18,750 00 

Broadway Fire Insurance Co. stock, 2,825 00 
-Citizens Fire Insurance Co. stock, . 440 00 

Stuyvesant Fire Insurance Co. stock, 2,000 00 

Citizens’ National Bank stock, . 1,500 00 

Third Avenue Railroad stock, . 10,000 00 

Citizens Fire Insurance Co. stock, . 6,000 00 

Peoples Bank stock, . . 2,500 00 

Bank of Commerce stock, . . 4,000 00 

Manhattan Co. Bank stock, . 4,450 00 

•Shoe and Leather Bank stpck, .. 17,50{) 00 

Bank of Commerce stock, . 800 00 

Brooklyn Gas Light Co. stock, . 5,500 00 

Union Trust stock, . . 2,000 00 

Lake Shore Railroad stock, . . 10.000 00 

Metropolitan Gas stock, . . ‘ 1.000 00 ‘ 

Citizens National Bank stock, . 1,000 00 

Western Union Telegraph Co. stock, 10,000 00 
Peoples Bank stock, . . 1.000 00 

Harlem Gas stock. . . . 10,000 00 

Bank of Commerce stock, . 1,500 00 

JN. Y. Central and H. R. R. stock, 20,000 00 

N. Y. Central and H. R. R. stock, 2,000 00 


$28,400 00 
1,097 50 
22,000 00 

11.250 00 
4,160 00 

I, 030 00 
1,097 50 

149,100 00) 
28,000 00/ 
85,000 00; 
20,000 00 ) 
16,050 005 
15,600 00 
20,200 00 1 
2,590 00 | 
5,700 00 
2,500 00) 
776 00V 
4,275 00) 

II, 310 00) 
4,650 00/ 
9,000 00 
1,547 00) 
5,700 00) 

50,h00 00 
1,040 00 
50,500 00 

20.250 00) 

1,000 00 f 

151.500 00) 
66,825 00> 
16,100 00) 
33,547 00") 
15,600 00 i 
21,750 00 I 

6,356 00 | 
790 00 | 
3,340 00J 
1,740 00) 
16,000 00) 

. 10,800 00) 
3,250 001 
4,320 00 V 
6,007 OOJ 
23,100 00 
864 00 
9,900 00 

3.100 00 J 
5,700 00 ( 
1,400 00 ( 

. 1,160 00J 

7.100 00\ 
1,300 00/ 

10.500 00 
1,620 00 

20,200 00 
2,020 00 


$22,500 00 
1,000 00 
15,000 00 
2,500 00 
3,600 00 
900 00 
900 00 

150,00 00 


100,000 00 

12,000 90 
17,000 CO 
1,000 00 

6,508 78 

11,000 00 

5,000 00 

5,750 00 

40,OOf) 00 
900 00 
45,000 00 

16,289 17 


200,000 00 


73,000 00 


18,800 00 


11.500 00 

17.500 00 
750 00 

6,000 00 


4,550 00 


6.500 00 

5,000 00 
200 00 
16,000 00 

1.500 00 


Total amount, 


$1,046,466 00 $1,020,212 00 


$818,147 90 


818,147 90 
















433 


Premium notes, loans or liens on policies in force, the reserve 

in excess of all indebtedness, .... 2,014,314 28 


Stocks, Bonds, etc., owned by the Company . 


United States bonds, 

Virginia State bonds, 

New York State Bounty bonds, . 
New York City Bounty bonds, 
Brooklyu Public Park loan, 


Bank of Commerce, New York, stock, 10,862 50 


Market value. Cost value. 

$1,023,568 88 $1,008,307 50 
5,082 00 4,500 00 

101,000 00 100,203 75 

9,135 00 8,613 00 

110,000 00 100,500 00 


9,460 00 


Total (carried out at cost value), $1,259,648 88 $1,231,684 25 


Cash in company’s office, $1,685.03; deposited in bank, $242,- 
459.04, ....... 

Bills receivable, $8,000.00; agents’ ledger balances, $1,535.40, 

Total net or ledger assets, as per balances, 


1,231,684 25 

244,144 07 
9,535 40 

$9,564,837 75 


Other Assets . 

Interest due and accrued on bonds and mortgages, 

Interest due and accrued on bonds and stocks, 

Interest due and accrued on collateral loans. 

Interest due on premium notes, loans or liens, 

Market value of bonds and stocks over cost, 

Gross premiums due and unreported on policies 

in force December 31, 1876, . . $151,212 

Gross deferred premiums on policies in force 

December 31, ... 107,388 


44 

65 


Total, ..... 

Deduct the loading on above gross amount 


$258,601 

51,720 


09 

23 


Net amount of uncollected and deferred premiums, 
Postage stamps, ..... 

Total assets, ..... 

Deduct items not admitted, .... 

Total admitted assets, .... 


219,866 21 
4,739 33 
15,587 05 
15,194 27 
27,964 13 


206,880 86 
78 89 

$10,055,148 49 
9,535 40 

$10,045,613 09 


Items not Admitted . 


Agents’ balances, 
Bills receivable, 


Total items not admitted. 


$1,535 40 

8,000 00 


$9,535 40 


V. — Liabilities. 

Net present value of all the outstanding policies 
in force on the 31st day of December, 1876, 
computed by the New York Insurance De¬ 
partment, according to the American Ex¬ 
perience Table of Mortality, with 4 1-2 per 
cent interest, .... 


$7,766,425 00 




















434 


Claims for death losses, and matured endow¬ 
ments not due, .... $218,93189 

Claims for death losses, and other policy claims 

resisted, ..... 41,500 00 


Total policy claims, . . . . . 260,431 89 

Dividends of surplus, or other description of profits due poli¬ 
cyholders, ...... 95,161 47 

Liabilities on policyholders’ account, . . $8,122,018 36 

Gross surplus on policyholders’ account, . . . 1,923,594 73 


Total liabilities,.$10,045,613 09 

Estimated surplus accrued on Tontine or other 
policies where the profits are specially re¬ 
served for that class of policies, . . $7,609 44 


VL—Premium Note Account. 

Premium notes, loans or liens, on hand Decem¬ 
ber 31 of previous year, . . . $2,180,500 10 

Premium notes, loans or liens received during 

the year, ..... 93,227 04 


Total, ...... 

Deductions during the year as follows, viz.: Notes, loans or 
liens— 

Used in payment of losses or claims, 

Used in purchase of surrendered policies and 
canceled by lapse, 

Used in payment of dividends to policyholders 
Redeemed by maker in cash, 

Charged agents for collection, 

Total reduction of premium note account, 

Balance of note assets at end of year, 


$2,273,727 14 


$75,398 15 

134,269 71 
19,705 74 
9,122 29 
20.916 97 


259,412 86 
$2,014,314 28 




.. • 



















434 1 


REPORT OF THE COMMITTEE ON GRIEVANCES 
RELATIVE TO THE PETITION OF 
STEPHEN ENGLISH. 

To the Honor able the Assembly of the State of New York’. 

The undersigned, the Committee on Grievances, to whom by 
resolution of the Assembly passed March 26th, 1873, the petition of 
Stephen English was referred with instructions to inquire into, inves¬ 
tigate and report upon the matters therein contained, would respect¬ 
fully report: That in obedience to the above resolution they have 
taken the testimony of a number of witnesses in the cities of Albany 
and New York; that in conducting their investigation your com¬ 
mittee have not only fully realized the responsibility imposed by 
their duty to ascertain whether the precious right of personal liberty 
which the State guarantees to each and every of its law abiding citi¬ 
zens has been violated in the arrest and prolonged incarceration of the 
petitioner, Stephen English, but have also been mindful of the grave 
obligation to conserve the beneficent institution of life insurance, 
and especially to consider the interests of the vast number of policy¬ 
holders comprising the company, at the instance of whose chief offi¬ 
cer the petitioner is imprisoned. 

The investigation has been as full as limited time and facilities 
permitted. A large number of witnesses have been examined, and a 
vast amount of documentary evidence submitted, a portion of which 
had already been copyrighted and v ithheld from the public by the 
officers of the company. Both parties were represented by able 
counsel. Much that upon casual examination might appear irrele¬ 
vant has entered into the testimony, but your committee found it to 
be indispensable to a full and correct ascertainment and comprehen¬ 
sion of the true attitude and relation of all the parties concerned, and 
the whole evidence is deemed of such importance that your commit¬ 
tee recommend that it be printed for the information and use of the 
Assembly. 

The evidence shows that the petitioner, Stephen English, was 
arrested ifpon an order granted by Judge Barrett, of the Supreme 
Court, on the 13th day of January last, and bail fixed at the sum of 
$20,000; that on the same day another order of arrest was granted 
by Judge Barbour of the Superior Court, upon which the bail was 
fixed at the sum of $20,000 ; that the said English being unable to 
procure the required bail was soon after arrested, and has ever since 
been confined in Ludlow Street Jail, in the city of New York. The 
alleged libels upon Frederick S. Winston, the president of the Mu¬ 
tual Life, are fully set forth in the complaint and answer, and your 
committee have necessarily been compelled to inquire into all of them 
in order to determine their weight and thereby to measure the jus¬ 
tice or injustice of the incarceration of the petitioner, English. 
They find that most of the material allegations of English against 


tthe character and actions of Winston are not new or original, but 
that they have been heretofore charged, and been made the subject 
of investigation, sometimes by trustees or others connected with the 
company; at other times by policy-holders, and especially by one 
who ior four years appears to have been the most active, outspoken 
and resolute opponent of the officers of the company. 

With the exception of the investigation made by the late superin¬ 
tendent, George W. Miller, when the policy-holder above alluded to 
appears to have been present during the greater part of the investi¬ 
gation in the attitude of prosecutor, these investigations have been 
ex parte , and appear to your committee, from the evidence, to have 
been conducted more for the purpose of palliating and defending, 
than correctly ascertaining and declaring the true character of these 
actions for which the officers had been arraigned. 

Your committee do not deem it necessary to go into all the charges 
in detail, but to report only and briefly on those deemed most mate¬ 
rial which are contained in the petition of Stephen English, and 
which constitute the chief elements of the libel, if any has been 
committed , upon President Winston, and to submit for your consid¬ 
eration the conclusions at which the committee have arrived. 

The charge, that surrendered and forfeited policies on the life of 
President Winston’s son were revived after his death , was proven 
to be true. All the policies alluded to had been surrendered and 
paid for, or forfeited for non-payment of premiums, nearly two years 
before his death, and were revived after death to the extent of 
twelve thousand dollars. The deceased son appears to have been an 
efficient and popular young officer, and worthy to be properly con¬ 
sidered ; but the restoration of the policies in the manner and under 
the circumstances' in which it was it was done was, in the opinion of 
your committee, a wrong upon the other policy-holders of the com¬ 
pany which the‘Officers and trustees should not have committed, and 
for which they may be justly censured. 

_ The illegal purchase, at a higher rate than its surrender value, of a 
policy upon the life of a trustee: its subsequent restoration when he 
was actually moribund and its payment as a death claim, were proven. 
The transaction appears to have been without the knowledge or 
sanction of the insurance committee or the board of trustees, and 
the whole responsibility appears to rest upon President Winston, and 
the evidence afforded to your committee no ground upon which such 
a palpable violation of official duty can be justified. 

The manner and apparent object of the purchase of some other- 
policies were such as your committee could not approve, but as they 
are of minor importance they need not be more fully noticed. 

The distribution of a bonus of over $189,000 among the officers 
.of the company, in addition to their ample salaries, and its conceal¬ 
ment from the policy-holders by charging far the greater portion of 
it to “ dividend account ,” were proven to be true. Whilst your 
committee fully approve the giving of liberal compensation for ser¬ 
vices of faithful officers, they hold that such compensation should be 
so given that it may be received as a reward, without operating as 
corruption, and that in this view the “ bonus ” distribution and its 


434' 


concealment from the policy-holders are deserving of serious condem¬ 
nation. 

Some loans and advances were made by President Winston in an 
unauthorized and irregular manner, but no loss appears to have been 
thereby incurred by the policy-holders, and but for their irregularity 
and the misrepresentation by which it was attempted to conceal 
them, naturally begetting suspicion of wrong intent, these loans 
would probably never have been made the subject of adverse criti¬ 
cism and censure. 

The use made by President Winston unofficially of over $18,000 
in payment of drafts of agents of this State in 1864, has been severely 
criticized and as warmly defended on the score of its necessity and 
patriotic motive, but in the opinion of your committee, the facts and 
attending circumstances disprove its necessity and invalidate the plea 
of patriotism, and show it to have been an undoubted violation of 
the charter, and an unwarranted use of trust funds by President 
Winston to serve his personal friends. 

Considerable sums of money are shown to have been expended 
and charged as taxes, office rent, counsel fees, etc., about which there 
fairly exists the suspicion of their improper use to inffiience legisla¬ 
tion at Albany and elsewhere; and of T hich the unauthorized pay¬ 
ment by President Winston of $3,500 to George W. Miller, the 
then superintendent of the insurance department, to further the so- 
called “ Miller Life Bill,” is a notable example, which called forth 
that just and merited rebuke contained in the report of the insurance 
committee of this House in April, 1872, and some of which gave 
rise to the controversy between the president and the actuary under 
whose directions the distribution of dividends had been acceptably 
made for many years, during which the company had attained its 
great position, and about whose capacity and integrity no question 
seems ever to have arisen until the will of the president was opposed 
by the actuary under a sense of duty which caused the withholding 
of the usual form of audit to the company’s statements of account 
which were known to be incorrect. 

No evidence was adduced to sustain the charge of an imposition 
upon borrowers of unlawful and oppressive rates of interest, and it 
is therefore dismissed. 

The collection of proxies by President Winston and Vice-Presi¬ 
dent McCurdy, through the agents of the company, under their di¬ 
rection, in numbers amply sufficient to secure absolute control over 
the election of trustees, is proven, and its justification attempted on 
the ground of its necessity to thus guard against the intrusion of 
unfit trustees. Put to this your committee wholly dissent, perceiv¬ 
ing in such a practice a far greater danger to the policy-holders in 
thus empowering the officers to select tin trustees at will, thereby 
virtuallv making the officers the masters, instead of the servants of 
the policy-holders, who do not seem to have fully comprehended that 
the charter of the company, in giving them the right, imposed upon 
them the duty, to elect the trustees without deference to the will or 
wishes of the officers of the company, and thus to maintain and di- 


434 4 


rectly exercise the power to correct and remedy defective or unfaith¬ 
ful management of its affairs. 

The charges above alluded to constitute the gravamen of the al¬ 
leged libels by the petitioner, English, upon President Winston, and 
your committee feel it incumbent upon them to state that whilst the 
petitioner, English, has been guilty of intemperate and harsh criti¬ 
cisms upon President Winston, others who have not been molested 
have in language more temperate, but with even greater severity,, 
publicly arraigned President Winston upon the same charges; and 
as there is much foundation in truth for the allegations of the peti¬ 
tioner, English, it is improbable that a jury would award President 
W inston damages at all commensurate with the enormous amount 
which he claims to have sustained, and that therefore the bail re¬ 
quired of the petitioner, English, is excessive and oppressive ; that 
his imprisonment is a just cause of grievance and a proper sub¬ 
ject for relief. And further, that as it is apparent to your commit¬ 
tee that whilst President Winston is nominally the plaintiff in the 
suit, the proceedings are in fact conducted by and at the expense of 
the Mutual Life Insurance Company, thereby showing that personal 
liberty may be abridged, and unjust and illegal punishment inflicted 
through forms of laws by a powerful corporation arrayed against an 
individual, and.in the opinion of your committee demonstrating the 
necessity of such legislation upon the law of libel as will prevent the 
infliction of punishment until guilt has been clearly established. 

And your committee would respectfully recommend the immediate 
passage of Assembly bill No. 1064, entitled “ An act in relation to 
orders of arrest m actions to recover damages for slander or libel, or 
on a promise to marry.” 

All of which is respectfully submitted. 

C. W. HERRICK, Chairman. 

E. S. WHALEN, 

N. A. WHITE, 

E. TOWNSEND. 


435 


Stephen English sworn. 

i 

Examined by Mr. Moak : 

Q. Was there a time when there was a litigation between yon and 
the officers, or between you and the Mutual Life Company of New 
Y ork ? A. Never between me and the company ; I never had any 
litigation with the company, or the company against me. 

Q. Well, between you and any of the officers of the company? 
A. Between me and Mr. Winston ; it was a private tight between 
Mr. Winston and myself. 

Q. You were the editor of a paper called the Insurance Times, 
were you not ? A. Editor and proprietor, and I am now. 

Q. Did that litigation grow out of certain publications in that 
paper in regard to the alleged mismanagement of the Mutual Life ? 
A. Partially. 

Q. How many suits were commenced against you for libel in 
regard to the publications as to the management of that company ? 
A. There were several suits or actions brought against me at the 
time by fire and life companies. 

Q. 1 mean in regard to the management of the Mutual Life ? A. 
I really cannot tell you, for there was so many. 

Q. Quite a number of them ? A. Yes, a large number of them; 
there was two civil actions in Queens county ; two actions that went 
to court, and one indictment. 

Q. Were those in any way compromised ? A. Those were actions 
brought against me by Mr. Winston, not by the company. 

Q. Well, it was in regard to the articles you published relative to 
the management of the company? A. Well, partially ; I took 
advantage of certain irregularities which I conceived the company 
had done, and in my fight with Mr. Winston I brought that matter 
in. . 

Q. Well, were those matters settled? A. They were. 

Q. About when? A. In January, 1874. 

Q. W as it part of the arrangement made at the time, that the 
publications in regard to the management of the Mutual Life by Mr. 
Winston were to cease ? A. It had nothing whatever to do with it; 
the Mutual Life had nothing to do with it. 

Q. I am speaking in regard to Mr. Winston’s management of it, 
particularly ? A. There was nothing about that at all. 

Q. No such understanding? A. No such understanding. 

Q. After the settlement of those actions, did your publications in 
regard to Mr. Winston cease ? A. Yes. 

Q. They were kept up down to the time of the arrangement, 
were they not ? A. No. 

Q. When did they cease ? A. Some months prior to it. 

Q. Was that at the time you were in the jail, incarcerated for 
want of bail? A. No ; during the time I was in jail I kept up the 
fight fiercer than before. 

Q. How' long were you in the jail ? A. Six calendar months and 
four days. 

28 


436 


Q How much bail was required of you? A. In those cases tried 
in court, I think it was $160,000; in the aggregate of all the cases 
against me, it was $440,000. 

Q. Four hundred and forty.thousand dollars in bail was required ? 
A. Yes. 

Q. And in consequence of your inability to furnish that you were 
put in jail for six months and over? A. Yes ; that was over a tire 
case as well; the case of George T. Holt, and Mr. Winston’s case. 

Q. Well, how much was required in each? A. Twenty thousand 
dollars was required in each of those cases, and that is $80,000, 
because you have to find two sureties on each of the $20,000 on 
unincumbered property in Queens county. 

Q. Where were you confined, in Queens county jail ? A. Ho. 

Q. Where then ? A. In Hew York. 

Q. Where was the place of trial laid, in Queens county ? A. Ho. 

Q. Where then? A. In Hew York; there were cases against mein 
Hewark, and in Hew Jersey, in Hew York, and all around, wherever 
my paper was published. 

Q. How did they come to get you in Hew Jersey; were you there 
and they caught you there so as to serve papers on you? A. Well, 
they had the right to serve me wherever my paper was published; 
they served me there, and gave me the option of going to jail either 
in Hew York or in Hew Jersey. 

Q. And you chose Hew York ? A. Yes. 

Q. How many cases had you in all ? A. I think eleven cases and 
five indictments. 

Q, The aggregate bail required was over $400,000? A. Four 
hundred and forty thousand dollars. 

Q. These ’•vere all either civil or criminal actions brought against 
you for publications in regard to insurance matters, life or fire ? A. 
Yes, it all arose over Miller; I brought charges against him and had 
him expelled, and the companies were all opposed to me for doing 
it; I turned around then and attacked Mr. Winston; Mr. Winston 
being the head of a great insurance company, I attacked him per¬ 
sonally, because, through his influence, a large number of the 
insurance companies withdrew their patronage from me; as soon as 
I turned Miller out, I turned against Mr. Winston and attacked 
him. 

Q. Your articles were directed against him personally? A. I 
commenced on personal matters and then went into matters con¬ 
nected with the management of the company. 

Q. Those matters were settled when? A. In 1S75. 

* Q. Was any sum agreed to be paid to you on account of that 
settlement? A. Yes. 

Q. How much ? A. I will say no life company paid me any 
thing or had any thing whatever to do with it. 

Mr. Husted —Those are personal mattei s, and ha ve nothing what¬ 
ever to do with us here; we don’t want to know any thing about 
your private matters, Mr. English. 



437 


Witness —I will say that no insurance company, neither the 
Mutual Life or the Equitable Life, or any other company, has paid 
me any thing, and I did not receive one-quarter of what I ought to 
receive. 

Mr. Moak —Does the committee rule that I should not ask that 
question. 

Mr. Husted —I rule, as chairman, that we have nothing to do 
with Mr. English’s private matters, and it is entirely optional with 
him whether he answers or not. 

Q. Were you paid any thing, or agreed to be paid any thing, by 
or on behalf of Mr. Winston on that subject? A. For false 
imprisonment, loss of business, loss of property, and every thing 
else, yes. 

Q. How much ? A. I don’t know that I have the right to men¬ 
tion how much. 

* • 

Mr. Wei ant —You have the right to mention it, if you think fit. 

Mr. Husted —Yes, it is 
.•as he pleases. 

Mr. Lang —That, it seems to me, is an entirely private matter; it 
was a slander suit brought against him by certain persons in an in¬ 
dividual capacity and settled. 

[Question ordered withdrawn by the committee.] 

Q. What were the irregularities in your publication that you 
charge were perpetrated by Mr. AVinston in the management of the 
Mutual Life ? A. That he was voting by proxies; that he had a 
number of proxies which enabled him to put in and keep in such of 
the trustees as he thought proper. 

Q. Any thing else? A. Yes, that there was some money paid to 
the State officers during the war, which was also an irregularity. 

By Mr. W eiant : 

Q. What State officers ? A. Of this State; something aboat a 
payment for the relief of the soldiers during the war; that was a 
matter I went into. 

By Mr. Husted : 

Q. A loan made to the Comptroller, was it not? A. Yes, a loan 
made to the Comptroller, the present Governor, as my recollec¬ 
tion is. 

By Mr. Moak: 

Q. AYhat else ? A. Well, I was a policyholder of the company; 


perfectly optional with him; he can do 





438 


the company lost no money by the transaction, but the principle 
was bad; it was establishing a bad precedent. 

Q. What else ? A. There were bonuses paid to the officers for a 
series of years, and put down, as dividends to policyholders. 

Q. They were returned as dividends to policyholders.? A. Yes ; 
I did not object to the bonuses being given, but to the way it was 
entered in the books. 

Q. You objected to the bonuses being paid to the officers and then 
being reported as dividends to the policyholders? A. No, I did not 
object to the bonuses. 

Q. But I understand you to say that you objected to bonuses 
being paid to the officers and then being entered in the books as 
dividends to the policyholders? A. Yes, to the manner in which it 
is entered in the books. 

Q. What else? A. His son had a policy and he allowed it to 
lapse ; and at his death the policy was revived ; I objected to that, 
that he ought to have paid his son’s widow a sum of money instead 
of reviving the policy. 

Q. You mean instead of establishing the precedent of reviving the 
policy after death ? A. I had no objection to paying him three 
times the amount that was paid, but it was the form and the manner 
in which it was done that I objected to. 

Q. You objected to the precedent of reviving a policy after death? 
A. It appeared that the son was inadequately remunerated for the 
services he rendered, and that his father did not press his claim be¬ 
fore the trustees so that he might have had sufficient salary, and 
when he died it was found that the young man was engaged at star¬ 
vation prices, and instead of paying him a proper salary they revived 
these policies; I consider it a dangerous precedent, and among other 
things I attacked it; it was all published in the legislative investi¬ 
gation. 

Q. I now renew my question—how much was paid or agreed to 
be paid, if any thing, by or on behalf of Mr. Winston, on that sub¬ 
ject ? A. I had nothing whatever to do with matters connected 
with the Mutual Life ; it was a private affair, and the Mutual Life 
had nothing to do with the settlement; probably didn’t hear of it, 
and probably don’t know of it at the present day. 

By Mr. Wei ant : 

Q. Were any of these charges contained in the publications for 
which suits were commenced for libel ? A. No. 

By Mr. Moak. 

Q. I understood you to say these publications were made the basis 
of the suits for libel against you? A. No, I did not; you did not 
ask that question ; those were articles in which I attacked him 
personally ; but he brought suit on other articles, less objectionable 
in my opinion, but in which I was weak, because I could not sustain 
4 them. 

Q. Were those part of the matters that gave rise to the suits and 


439 


indictments ? A.* I think it provoked the suits ; but they were not 

embodied in the suits against me. 

Q. In the complaint you mean? A. Yes, in the complaint. 

Q. None of them? A. I think not; I think they took it upon 
some other statements. 

Q. What were the charges for which you were held on this im¬ 
mense bail ? A. I really forget; my lawyer here, Mr. Moses, has 
the papers. 

Q. Can’t you recollect % A. I know they went upon points I was 
not strong upon. 

Q. In the same article you had made charges on other matters ? 
A. In the same paper, but in a series of articles. 

Q. M ere none of these the subject of proceedings against you, 
either civilly or criminally ? A. I really forget now. 

Q. What is your best recollection as to whether they were or not ? 
A. My impression is they were not; not any of them; I think they 
took me on some other issues I could not sustain; they took advan¬ 
tage of that. 

By Mr. Weiant : 

Q. These irregularities of Mr. Winston were made the subject of 
certain publications by you ? A. Yes, among other things. 

Q And did you cease the publications regarding these irregulari¬ 
ties after the settlement took place ? A. No ; long before the set¬ 
tlement I was tired and disgusted with it. 

Q. Did you retract ? A. No ; I never retracted a word. 

Q. Did you continue the publications with reference to the irregu¬ 
larities after the settlement ? A. No; I ceased several months 
before it was settled. 

Q. Did you understand this settlement included the settlement of 
these publications or a discontinuance of them? A. Never; no, the 
•only question was, Mr. Winston had imprisoned me, falsely, in jail; 
he had injured my health ; my business was injured ; I lost a lot of 
money, subscribers ; my property went to the dogs during the time 
I was in jail; I went into jail a sound man, and came out wrecked, 
and I was glad to get compensation for what he had done. 

Q. I think you stated you had not continued this publication 
since ? A. No ; I had ceased several months before that. 

Q. And you have not continued, then, since the settlement at all? 
A. No, sir; while I was incarcerated I continued the tight as bit¬ 
terly as ever; when I came out I was very glad to get compensa¬ 
tion ; and I made a mistake all the way through. 

Q. You don’t mean to say you were wrong? A. No, not at all. 

Q. You claim still that you are right? A. I do; I lost three 
times as much as I got; I had to pay thirty dollars a week for board, 
besides other expenses ; I was robbed and plundered by the sheriff’s 
officers and had to pay $150 a night while I was trying to get bail; 
$250 they exacted from me, and I preferred to go to jail rather than 
pay it; the deputy sheriff at the tiifie, and the clerk of the sheriff, 
•or at least his man, exacted a $250 check, in order that I could get 
.around to get bail; I was imposed upon in every conceivable Way. 


i 


440 


Mr. Moak —I now put the question which I put‘before with this 
view"; in all cases of fraud, or in all cases where a settlement is 
made, fraud is always accomplished in a roundabout way; I claim, 
in the first place, that if a necessity existed for this series of articles 
in regard to insurance, and he having been prosecuted in the manner 
he has described, it is a question of fact for the committee to deter¬ 
mine whether, after all, this had been done; it was not part of a 
scheme to prevent publication in regard to insurance matters. 

9 

Mr. Husted —He has already testified that it is not. 

Mr. Moak —He says it was not agreed by any officers of an insur¬ 
ance company to pay him, but as we understand all these matters, if 
any thing is going to be done nothing is said about it. 

Mr. Husted —He says it is a private matter, and, as chairman of 
the committee, I shall rule it is not in order to put that question. 

Mr. Cowdin —As I have not been in the room during the former 
part of the testimony, I would like to put a few questions: Are you 
the Mr. English referred to in the testimony yesterday as having a 
difficulty with Mr. Winston? A. Yes, sir. 

Q. Was it a matter pertaining to life insurance, or a purely per¬ 
sonal matter? A. An entirely personal matter between Mr. Winston, 
and I. 

Mr. Husted —The question now is how much he was paid, or 
agreed to be paid, on that matter; that, Mr. English tells us, is a 
matter of his own, and don’t consider the question proper. 

Mr. Cowdin —I think our time can be better employed than in¬ 
vestigating private quarrels between private individuals. It it is 
any thing pertaining to life insurance, which shall enable us to more 
intelligently discharge our duties, I shall be glad, for one, to hear it, 
but if it is not, I don’t propose to waste time by going into it. 

The Chairman —The question before the committee is, whether 
that question shall be withdrawn. 

Mr. Moak —I will put my question again, and take the ruling of 
the committee upon it; how much was paid to you, and agreed to 
be paid to you both, on the settlement of this difficulty ? 

Mr. Cowdin— Add to that question “ out of the funds of the com¬ 
pany.” 

Mr. Moak —I would rather have my question answered the way I 
put it. 





441 


Witness —I never received one cent of money from any life insur¬ 
ance company, either the Equitable or Mutual, or any life insurance 
company, or any corporation or institution chartered by this State ; 
not one cent on the settlement of that case. 

Q. How much were you paid, or agreed to be paid, by any indi¬ 
vidual or individuals? A. I don’t know that the committee, or even 
the legislature of this State or any other State, has any thing to do 
with my private affairs; I had a fight with George T. Hope, and 
what there was about that, or how it was settled, or what I received 
the committee has no right to know that, and has nothing to do with 
it; l am on the most friendly terms with the Mutual Life, and kept 
a policy in it during the time I was in jail ; I even brought it busi¬ 
ness ; I induced a hundred people to take out policies in that com¬ 
pany while I was in jail, and the solvency of the Mutual Life was 
not in question; when papers attacked the solvenc} r of the Mutual 
Life, I attacked those papers; .but the solvency of the Mutual Life 
was not in question at all; Mr. Winston did me an injury, and I 
attacked him, and tried to knock him out of office if I could ; the 
trustees were on the most intimate terms with me all the time. 

Mr. Moody—I move that the question be rejected. 

Motion carried. Question rejected. 

Q. Now, I am requested to ask you whether any person connected 
with any life insurance company in the city of New York sent for 
you and requested you to settle these matters ? A. Yes; prior to 
the settlement, but I indignantly spurned the proposition. 

Q. Who was that? A. Mr. Hyde and Mr. Bloss, and some other 
parties, agents of companies; but I indignantly spurned it. 

Q. Any one else? A. No one else that I remember. 

Q. Were any overtures made to you by those persons for a settle¬ 
ment? A. No, certainly not; they wanted me to stop, because it 
was injuring life insurance business ; nearly every life insurance com¬ 
pany asked me to cease, and that was the reason I ceased attacking 
Mr. Winston, as it was represented that he was the head officer of 
the Mutual Life, and the attacks on him were injuring the business. 

Q. When Mr. Hyde sent for you, was any one present but you and 
Mr. Hyde? A. I think not; Mr. Alexander might have been. 

Q. You say no proffer was made to you of any sum ? A. No, sir. 

Q. Or statement that any sum would be given you? A. I spurned 
the whole affair ; that was several months before the settlement got 
around ; when the settlement got around I was very ill. 

Q. With whom was the settlement made by you? A. With no 
person connected with any life insurance company in any way, shape, 
or form or manner. 

Q. With no life insurance company ? A. No, sir. 

Q. When was this ? A. In 1874; on the 23rd of January, 1873, 
I went to jail, and I remember that day. 

Q. Did you have any thing to do with the commencement of a 


i 


442 


suit, for the purpose of winding up any of the insurance companies 
in New York? A. Yes, I have. • 

Q. What companies ? A. The Continental Life. 

Q. Were you connected wdtli it as a party or simply advisory? A. 
I was prosecutor of the case; the company was put into the hands 
of a receiver; in consequence of the law T s being so imperfect, the 
stockholders in collusion with delinquent officers, obtained through 
Judge Pratt the appointment of a favorable receiver ; subsequently 
the Insurance Department attempted to put it into the hands of 
another receiver, and they appealed, and appealed, and appealed 
against it; I took up the case through my lawyer, Mr. Moses, and I 
petitioned the court to have a referee appointed in order to ferret 
out the delinquencies of the officers, and that referee has effectually 
and thoroughly sifted the matter, and Mr. Moses and myself got up 
all the evidence to show the rascality and robberies committed by its 
officers. 

Q. Well, what officers were there? A. Luther D. Frost and R. 
D. Frost, president and vice-president, and the secretary’s name, I 
think, was Rodgers. 

Q. Were those the only persons you made charges against ? A. 
Those w^ere the only ones ; there were parties acting with them who 
bought policies and got money for them. 

Q. You brought suit as a policyholder? A. I did ; to show the 
rascality of the company. 

Q. How long was that policy held by you ? A. I took it out 
several years ago, for my neice, and allowed it to lapse, and revived 
it again in another form, in order to have control over it. 

Q. How much was it ? A. One thousand dollars, or $1,500 I 
don’t know which. 

Q. How many other companies have you been insured in ? A. In 
every company in the country, very near, I have been insured in, 
but they are nearly °11 bursted up. 

Q. How many do you hold policies in? A. I hold policies in the 
Mutual Life, the best^ in the lot. 

Q. In what others ? A. I have got so many, I don’t know. 

Mr. Moak —The object of asking the question was to see what 
motive he had for stating frankly every thing that occurred, or 
whether he had any motive for concealment. 

Mr. Husted— He has just shown that as a life policyholder in one 
company, he went for it. 

The Witness —I went for the officers in that company and then 
took proceedings against the New Jersey Mutual Life Insurance 
Company; 1 was a policyholder there, and also in the Security Life. 

Q. What other companies do you hold policies in ? A. I think I 
hold one in the United States Life ; I think only $1,000 or $1,500; 
I have one in the New York Life. 


443 


Q. For how much ? A. One thousand five hundred dollars; one 
in the Columbia Life in St. Louis, and one in the St. Louis Mutual 
Life. 

Q. Well, as to the Equitable? A. 1 am not a policyholder in the 
Equitable. 

Q. As to any other New York company ? A. I forget, I have so 
many. 

Q. Did you take any of those policies in the shape of advertise¬ 
ments? A. No, sir, never. 

Q. Your premiums were paid in money? A. Yes, sir. 

Q. What were the irregularities which you complained of in regard 
to the Continental Life ? A. Robbery and plunder. 

Q. In what way? A. In making false returns. 

Q. Well, in what way; that is what we want to get at, ‘how they 
were made ? A. They sent agents out to California, and all through 
the west, and they bought up all the policies there which they could, 
and thus saved the reserve and put the reserve into their pockets. 

Q. How was that carried on; suppose you tell us ? 

Mr. Moses —There has been about 1,700 pages of testimony taken 
• on that very question. 

Mr. Moak —Well, he can give us an epitome of it; he can give 
us the substance of it without going through so many pages ? A. 
Well, the method of it is this : they would call upon a poor unsus¬ 
pecting policyholder, and by telling him the company was insolvent 
and induce him to give up the policy for a small amount, and then 
pocket the reserve. 

Q. In other words, if the reserve was $600 they would get the 
policy surrendered for a small sum? A. Yes, for forty dollars, and 
then pocket the difference. 

Q. Who would ? A. The president and vice-president; they 
have run away. 

Q,. Well, how did they do it? A. They despoiled the company; 
they loaned the secretary $22,000 on his property, and then signed 
it off without receiving any consideration. 

Q. Any thing else ? A. A large amount of the assets of the com¬ 
pany was transferred to the New Jersey Mutual Life. 

Q. In what way ? A. For the purpose of imposing upon the 
Secretary of State of New Jersey; there was an examination of the 
New Jersey Mutual Life being made by the Secretary of State of 
New Jersey ; the Frosts were stockholders, and in order to deceive 
him they transferred those assets there to have them inventoried 
when the investigation was made, and so gave that company an 
appearance of solvency, while in reality that company was insolvent 
and those were our assets. 

Q. Their motive in doing it, you say, was that they were stock¬ 
holders in the New Jersey Mutual ? A. Yes. 

Q. To what extent ? A. I don’t know. 

Q. Their motive was, as you understood it, that being stockholders 


444 


of it, they wanted to save the company ? A. Exactly ; that was the 
intention of it, to bolster it up. 

Q. WJiat became of the assets that were taken to New Jersey 
after they were inspected ? A. They were partly brought back, and 
partly taken by Daniel J. Noyes. 

Q. Partly brought back where ? A. To the Continental office ; 
and the receiver, General Anderson, lost some of the bonds exhibited 
at Newark; I think there was $17,000 of them missing. 

Q. In getting over to New Jersey and back $17,000 of them got 
out? 

Mr. Moses —It was $87,000. 

Witness —Yes, $87,000 worth of them fell out. 

Q. How much was the amount transferred to the New Jersey 
Mutual ? A. I forget. 

Q. Can you give us approximately ? A. No, Mr. Moses is my 
lawyer and he took charge of that department of the case. 

Q. Was there any thing lost in that operation except the $87,000 ? 
A. I don’t know that there was. 

Q. What kind were those that were lost ? A. United States 
bonds they were. 

Q. What else was lost, if any thing ? A. Mr. Moses will be better 
able to give vou all the facts; he is here, and will give you all the 
facts. 

Q. I have no doubt you can give us the facts? A. No, I cannot 
now; I was ill at the time. 

Q. Do you know of any thing else that was lost of the assets of the 
Continental ? A. No, 1 do not, personally ; Mr. Moses is here 
and he will give you all the facts. 

Q. What other practices were there in connection with the Con¬ 
tinental Life, either as to buying up policies and swallowing up the 
reserve; how did they get that reserve out ? A. They had the 
reserve in their own possession. 

Q. That may all be, but won’t you explain how they got it into 
their possession; I mean how they got hold of it ? A. Why, some 
one would buy up the policies; a man by the name of Hammond 
bouglit the policies up, and took possession of them. 

Q As assignee ? A. No, he would go around and falsely repre¬ 
sent that the company was insolvent, and could not pay any thing; 
and he, as the friend of the policyholders, advised them to sell them 
out, and some got forty cents on the dollar. 

Q. What Hammond is that ? A. He is the agent in Cincinnati; 
not our friend over the way there 

Q. For what company ? A. For the Continental Life ; they sent 
him out specially for that purpose; they sent him out on a large 
salary and a percentage on what he could make, and every policy 
he bought up was so much in their pockets. 

Q. Well, how did they go through with the form of getting it;, 


445 


through what form did they go to get L in their hands? A. They 
had the money in their hands already. 

Q. Did they not go through some form ? A. No, no form at all; 
they simply stole it. 

Q. Like highway robbers, then ? A. They were worse than high¬ 
way robbers. 

Q. Then they put the policies in their vaults, I suppose ? A. I 
suppose so; but I do not know whether they did or not. 

Q. Well, I did not know whether or not, some one got a paid-up 
policy, and charged the company with it. A. Oh ! no. 

By Mr. Husted . 

Q. They charge it on the hooks as so much paid for the surrender 
of the policies ? A. Yes. and the balance between what the reserve 
was and what they paid they put in their pockets. 

By Mr. Moak : 

Q. What did they do with the reserve? A. Why, put it in their 
pockets. 

Q. Well, that was the surplus, wasn’t it? A. No, sir, it is not 
the surplus. 

Q. Well, the surplus of the policies, who had that? A. No, you 
must not speak of a surplus at all, it was the reserve; the money 
the State compelled them to retain in their vaults to meet their 
liabilities. 

By Mr. Husted : 

Q. It would appear as if a person had come and surrendered his 
policy and took his money? A. Yes, it would appear as if $800 
was paid to him, whereas he was only paid $150. 

Mr. Moses —They drew drafts in blank, and got the policyhold¬ 
ers to sign them when they paid them for that sum; $150 each; 
they then filled them up for $800, and got them cashed in California. 

By Mr. Moak ; 

Q. That is what you would call fraud isn’t it? A. No; I should 
not call it fraud ; it was worse than fraud, it was downright robbery. 

Q. Were there any other irregularities connected with the Conti¬ 
nental Life ? A. Not that I now recollect; there were a great many 
things that I had to leave to my lawyer, and he attended to it. 

Q. To what extent were the assets transferred to New Jersey ? 
A. I really don’t recollect; it was either $355,000 or $314,000. 

Q. Well, it was over $300,000? A. Yes. 

Q. And got all back except $87,000? A. Yes. 

Q. What was the character of those got hack? A. Non-negotia- 
ble mortgages, that they could not use; that was what Judge Ful¬ 
lerton had. 


440 


Q. If they were non-negotiable mortages, given to the Continen¬ 
tal Life, how could they appear to be the property of the New Jersey 
Mutual ? A. There was a sort of formal reinsurance. 

Q. Then they went through the form of reinsuring the risks of 
the Continental? A. Yes, sir. 

Q. After the money was counted, in New Jersey, was the reinsur¬ 
ance revoked? A. No ; they ran away ; they were found out. 

Q. You state there was nothing else you now remember in regard 
to the Continental ? A. No; not to my recollection, just now. 

Q. Well, in regard to North America? A. I know nothing about 
that. 

Q. You had nothing to do with that? A. No. 

Q. And were not a policyholder in it ? A. No, sir. 

Q. Nor with any other of the company ? A. No, sir. 

Q. You had nothing to do with them either? A. No, sir. 

By Mr. Weiant : 

Q. Do you know, or have you any information, that any other 
•company has been engaged in, or has had any person in their behalf 
engaged in purchasing policies for a like purpose ? A. I think not. 

Q. You have no knowledge or information to that effect? A. Not 
to my knowledge. 

Q. Or information ? A. Or information. 

Q. Have you any knowledge or information that other companies 
have transferred securities in the manner spoken of by you ? A. I 
don’t think they have. 

Q. At the time of making their annual report, I mean? A. No, 
I think our companies as a general rule are all sound and reliable and 
well managed. 

By Mr. Coulter : 

Q. You say yon are not positive that in that conversation which 
occurred between you and Mr. Hyde, when he sent/hz* you, whether 
any one else was present or not? A. I really forget, sir; Mr. Hyde 
spoke to me several times on the subject; I think Mr. Henry M. 
Alexander was there. 

Q. But you don’t recollect whether any other person was present ? 
A. No, sir. 

Henry J. Furber sworn : 

Examined by Mr. Moak : 

Q. With how many insurance companies are you connected, and 
in what way ? A. I am vice-president of the Universal Life Insur¬ 
ance Company of New York, financial manager of the Charter Oak 
Life Insurance Company of Hartford, Conn.; I was, until about a 
month ago, president of the North American Life Insurance Com¬ 
pany of New York. 

Q. Have you been connected with any other insurance company 
within the past five years, as stockholder, other than the three you 
have named ? A. No, sir. 


447 


Q. Nor as officer or director? A. I will say as to stockholder— 
let me qualify that; stock of the Guardian Life Insurance Companj 7 
has stood in my name to qualify me as a director, although I am not 
the owner of it; also stock of the New York State Life Insurance 
Company has stood in my name, that stock belonging to the Univer¬ 
sal Life Insurance Company; I have been a director in the Guardian 
Life Insurance Company, and also a director in the New York State 
Life Insurance Company, and also in the North America Life Insur¬ 
ance Company. 

Q, With which did you first become connected? A. The Univer¬ 
sal Life Insurance Company. 

Q. When ? A. The 1st of November, 1865. 

Q. And in what capacity were you then connected with it ? A. 
My connection with the Universal Life Insurance Company, at the 
time I first became connected with it, was really the manager of the 
agents of the company; I held the title of vice-president, but my 
duties were the management of this department, of the agency busi¬ 
ness of the company. 

Q. When was the universal organized? A. ’In February, 1865. 

Q. You went in at the organization? A. No; in the November 
following. 

Q. How long did you retain the position of vice-president of the 
Universal ? A. Until the present time. 

Q. You still hold it? A. Yes, sir. 

Q. The same position ? A. Y es, sir. 

Q. Was it a stock company or mutual ? A. A purely stock com¬ 
pany. 

Q. What was the capital? A. Two hundred thousand dollars. 

Q. What do you mean by purely stock company ? A. There are 
three kinds of companies, what are understood as purely mutual, that 
is, companies organized before the passage of the law of 1853, which 
required a capital stock of at least $100,000; those are understood 
as* purely mutual companies; another class, those organized since 
1853, are required to start with a capital stock of $100,000; those 
charge the same rates as mutual life insurance companies, and differ 
from mutual life insurance companies only in having stock, upon 
which they pay different rates of interest in different companies; the 
stock is entitled to seven per cent, and the stockholders have a share 
in the profits ; then we come to the purely stock companies, and the 
Universal was the first purely stock company in this country; it was 
started with a capital stock, and instead of charging the rates that 
had been charged by the mutual companies, we charged from twenty 
to twenty-five per cent less, with the understanding that if there 
was any profits it belonged to the stockholders. 

Q. With the understanding that there was to be no dividend to 
the policyholders? A. No, the dividend that there was belonged to 
the stockholders, but the policyholder was benefited in the reduction 
of his premium ; he knew what he had to pay when he took his 
policy, and it amounted to so much insurance for so much money. 

Q. Well, the Universal, you say, was a purely stock company; 
and organized on the plan you have stated? A. Yes, sir. 


448 


Q. How soon after that did you become connected with any other 
company, and what was the next company you became connected 
with? A. The Guardian. 

Q. When did you become connected with that ? A. In March, 
1874. 

Q. In what capacity did you become connected with that ? A. Will 
you allow me to commence there and give you the history of the 
whole thing ? 

Q. Certainly? A. In the latter part of February, 1874, my atten¬ 
tion was called to the Guardian Life Insurance Company; after 
having an interview with some of the officers and directors of the 
company, and after having examined into the affairs of the company 
as thoroughly as I could examine into the affairs of the company in 
the time allowed me, I found in that company there was apparently 
a deficiency of $650,000; what I mean by an apparent deficiency is 
this: that the value of its assets did not equal its theoretical liabili¬ 
ties or its reserve, what would be the legal reserve and their out¬ 
standing death losses, by $650,000 ; I brought the matter to the 
attention of some of the directors of the Universal Life Insurance 
Company, and the question with them was simply this: here is a 
company which has succeeded in building up an amount of business 
equaling about $30,000,000 of insurance; the reserve upon the out¬ 
standing policies at that time was about $4,000,000, according to the 
result of our examination at the time ; we were a purely stock com¬ 
pany seeking business; the Guardian Life Insurance Company, if no 
one had come to its rescue at that time, would have passed into the 
hands of a receiver and been wound up ; the question for us to 
decide—a stock company, seeking business in any way we could 
obtain it honorably—was whether that business could be built up 
for $650,000; whether we could go out into the world and build up 
a similar amount of business for $650,000 ; that matter was fully 
discussed by our executive committee, and then by our full board of 
directors, and it seemed to them that it would be impossible to build 
up that amount of business, policy by policy, for $650,000 ; the ques¬ 
tion then was whether it would not be advisable to buy that business 
and make up that deficiency of $650,000; the question with them was 
whether there would not, from the legitimate profits of the business, 
result an amount, in time, equal to the deficiency, then existing in 
the Guardian Life Insurance Company; I said to the directors of 
the Universal Life Insurance Company that I believed that that busi¬ 
ness was worth the $650,000; that the Universal Life Insurance 
Company could afford to take the business, and they could make a 
legitimate profit out of it, after taking care of all the policyholders 
of the Guardian Life Insurance Company; as I said, it was discussed 
thoroughly by the executive committee, and discussed by the full 
board of directors, and after that discussion it was determined to 
enter into a contract with the Guardian Life Insurance Company, 
by which we would get the benefits of the business on condition that 
some one provided that that deficiency of $650,000 could be made 
good ; that deficiency of $650,000 was made good. 

Q. Will you explain how, please? A. Yes, sir; and if you will 


449 


be patient with me I will give you all the facts; it was necessary 
that the $650,000 should be added to the assets of the Guardian Life 
Insurance Company in such a way as that it would not create a lia¬ 
bility of $650,000; $650,000 was added to the assets of the Guard¬ 
ian Mutual Life Insurance Company; of course no one contributed 
or would contribute $650,000 to the assets of the Guardian Mutual 
Life Insurance Company without some arrangement being made 
with them by which that $650,000 would be returned to them out 
of the future profits of that business ; that $650,000 was paid into 
the Guardian Mutual Life Insurance Company, and contracts were 
made between the Universal Life Insurance Company and myself, 
two contracts, one for $330,000, which I suppose is known to you all, 
as it has been extensively published, and the other provided for the 
return of $320,000; these contracts specified that I was to receive, 
myself or my assigns should receive, a certain per centage of the 
premium income resulting from the Guardian Life Insurance Com¬ 
pany’s business, and also a certain proportion of any profits resulting 
from the business by way of purchasing policies, until the sum so 
contributed by me to the Guardian Mutual Life Insurance Company 
had been refunded to me, with interest, when the contract ceased; it 
simply provided for the return to me of the money I put in the 
Guardian Mutual Life Insurance Company, which I put in to make 
it good and save it from the hands of a receiver; the next point is, 
did that not create a liability ? Did not the payment of that money 
into the Guardian Mutal Life Insurance Company, and those con¬ 
tracts providing for the repayment of it to me, create a liability? No, 
it did not; and for this reason: there was no agreement to pay that 
money back to me; it was an agreement to pay that money back to 
me out of a certain source of profit which would result to the com¬ 
pany as surely as the company continued its corporate existence; in 
other words— 

Q. Let us clear this matter up as we go; you say there was an 
“ apparent ” deficiency of $650,000 ; now, according to the ordinary 
rules of life insurance, there was an actual deficiency of that amount, 
was there not; in other words, if the Superintendent of the Insur¬ 
ance Department of the State of New York had sent an examiner 
down there to examine it, his return would have been that there was 
a deficiency of $650,000 according to the terms of the office ? A. I 
used the word “ apparent ” for this reason: from the examination 
we were enabled to make, the deficiency was $650,000; subsequent 
developments showed it was twice that sum. 

Q. So far as the examination of the company would show by the 
examination of its books that you made, there was a real deficiency 
of $650,000 ? A. Yes, and more too. 

Q. You say practically, then, that with all the experience you had 
had, as an insurance man, there was a deficiency of over $650,000 
which you were unable to discover at the time you made the contract ? 
A. I did not discover It at that time. 

Q. Is it in the power of a company to deceive even an expert in so 
large an amount as $650,000? A. That depends upon the time he 
has. 


450 


Q. You were making a contract by which you assumed to carry 
their risk ? A. Yes : but the contract was made in such a way that 
the Universal Life Insurance Company was not affected by it-^ 

Q. It affected the $650,000 of money put up ? A. Yes, if the 
company went into the hands of a receiver before it was brought 
through it would; the Universal Life Insurance Company would not 
lose an y thing in any event. 

Q. Well, it interested you, didn’t it ? A. Yes to a certain extent. 

Q. You had sufficient interest in it that you did, in fact, invest 
$650,000, which would have gone into the hands of a receiver if a 
receiver had been appointed the next day, at the time you made the- 
arrangement ? A. Well, hardly that; let me explain the contract 
to you a little: I paid $650,000 into the Guardian Mutual Life 
Insurance Company, which, in accordance with the examination 
made at that time, made the company, apparently, sol vent; I 
believed then it was solvent; the Guardian Mutual Life Insurance 
Company then made a contract with the Universal Life Insurance 
Company by which the Universal Life Insurance Company agreed 
to pay to the Guardian Life Insurance Company, from time to time,, 
eighty per cent of the losses sustained by the Guardian Mutual Life 
Insurance Company, on any of its outstanding policy obligations: 
the Guardian Mutual Life insurance Company agreed, in considera¬ 
tion of that agreement with the Universal Life Insurance Company, 
to pay to the Universal Life Insurance Company, eighty (80) per 
cent of ‘their reserve upon their outstanding policies, as of the first 
day of January, 1874; they agreed, also, to pay to the Universal 
Life Insurance Company eighty (80) per cent of all premium receipts 
which they might thereafter receive in their business; now, the con¬ 
tract was made in such a way as to protect the Universal Life Insur¬ 
ance Company, and protect, also, me, for this reason, that I knew 
the Guardian Mutual Life Insurance Company had assets enough to 
provide for eighty (80) per cent of its outstanding policy obligations, 
and the Universal Life Insurance Company assumed that eighty 
(80) per cent, got the money for it, and then made the agreement 
with me by which they gave me a certain per centage upon the pre¬ 
miums they received from the Guardian Life Insurance Company, 
or upon the reserve upon policies that were purchased or forfeited, 
that they had assumed, and one of two things must necessarily occur; 
the man must continue to pay, or he must cease to pay, and the 
Lmiversal Life Insurance Company was bound to me to pay me a 
certain commission if he continued to pay, or a certain per centage 
of the reserve if he failed to pay; so I could not lose in any event; 
you understand now how it was, I suppose. 

Q. Yes; the loss would have resulted to the Universal instead of 
you? A. Uo; there was no loss. 

Q. Suppose fhe day after you paid in the $650,000, the day after 
the money became the property of the Guardian, a further deficit of 
$650,000 had been discovered, and a receiver appointed ? A That 
would have made no difference to the Universal Life Insurance Com¬ 
pany or me; eighty (80) per cent of the $4,000,000 was $3,200,000 : 
that money was paid to the Universal Life Insurance Company. 


451 


Q. By whom ? A. By the Guardian Mutual Life Insurance Com¬ 
pany. 

Q. Handed over at the time ? A. Handed over at the time, that 
is $2 400,000 of it. 

Q. If the Guardian still retained its liabilities on those policies, 
and handed over $2,000,000 and over of its reserve to the Universal, 
then the Guardian was insolvent? A. Oh, no ; because when it got 
rid of eighty (80) per cent of its assets, it got rid of eighty (80) per 
cent of the liabilities to the Universal Life Insurance Company at 
the same time. 

Q. Then there was nothing to pay the $650,000 ? A. It was part 
of the $3,200,000. 

Q. Then there was a deficiency in one of them ? A. Certainly ; 
the Guardian Life Insurance Company was deficient to the amount 
of $650,000. 

Q. Until that amount was made up by future premiums? A. Yes. 

By Mr. Flo yd- Jones. * * 

Q. That was paid by you in cash ? A. Entirely in cash and secu¬ 
rities ; the $320,000 was in securities. 

By Mr. Moak : 

Q. Well when you put up that amount one of them was deficient 

or else vou were deficient ? A. It don’t matter whether I was or 
* 

not; but there is another matter; that the Guardian Life Insurance 
Company was’still deficient $650,000 I did not discover. 

Q. Well, whether you did or not, my question is that one or other 
was still deficient, was it not ? A. No ; I will give you an explana¬ 
tion Here is a company that has $3,350,000 of assets; its reserve 
upon its outstanding obligations is $4,000,000 ; it is short $650,000 ; 

I come forward, or somebody else comes, and contribute to the assets 
of the company $650,000, taking such r contract from the company 
as—we will suppose for the sake of the argument—does not create a 
liability against the company in an insurance point of view; I will 
explain that to you: supposing some one comes and gives the com¬ 
pany $650,000; it now has $4,000,000 of assets and $4,000,000 of 
liabilities; it is not short at all; I am goiug to eliminate, for the 
time being that shortage; now, this company goes to another com¬ 
pany, and makes an agreement with some other company, in which 
it says we will give you eighty (80) per cent of the $4,000,000, 
which will be] $3,200,000, and we will give you eighty (80) 
per cent of the future premium income of the company, provided 
that you, this other company, will agree to pay us, whenever any 
loss occurs by any policy outstanding, eighty (80) per cent of the 
loss so sustained; what is the result of it? The result of it is, the 
company making the arrangement, instead of having $4,000,000 of 
assets left, has $800,000 left; it has eighty (80) per cent of its future 
income pledged ; it has $4,000,000 of outstanding policy obligations, 
that is, the reserve, less $2,800,000 reinsured, which leaves its net 
liability of $800,000 and its assets $800,000. 

29 * 



452 


Q. That may all be, but you have not got the man paid that gave 
to this company the $650,000? A. Well, now we will pay him; 
tills company that has reinsured the other company has now got 
$3,200,000 assets; it has got $3,200,000 of liabilities that it has 
assumed under this arrangement; you understand that; it has agreed 
with the party who put in this $650,000, that is, this reinsuring 
company has agreed as follows: The Guardian Life Insurance Com¬ 
pany has agreed to pay us, the Universal Life Insurance Company, 
eighty (80) per cent of its premium income, which at that time was 
about $1,000,000; that is $800,000 a year; that was its premium 
income about that time; the Guardian Mutual Life Insurance Com¬ 
pany has agreed to pay us $800,000 a year on existing policies, the 
reserve upon which is $3,200,000; “ In consideration of your having 
put the money in there at our request, we will agree to pay you—I 
think the figures were—fifteen per cent, and possibly twenty per 
cent of the $800,000; ” well, supposing the Guardian Life Insurance 
Company continues to pay the $800,000, that would give the person 
who put in the money $160,000 a year, which in due course of time 
would pay back the $650,000; that is all plain enough, isn’t it ? of 
course, the Guardian Life Insurance Company paid to us, or to the 
Universal Life Insurance Company, the premiums upon all policies 
as paid to them; now we will get down to the individual policy¬ 
holder ; you, Mr. Moak, we will suppose, for the sake of the argu¬ 
ment, was insured in the Guardian Mutual Life Insurance Company ; 
your premium was $100 a year; you paid your $100 to the Guardian 
Life Insurance Company regularly; you had nothing to do with the 
contract with the Universal Life Insurance Company; the Guardian 
Life Insurance Company paid eighty per cent over to the Universal 
Life Insurance Company, or eighty dollars; the Universal Life 
Insurance Company paid fifteen per cent to me in return for the 
money I put in; now, we will suppose, of our reserve, on this 
$3,200,000 there is $200 that represents your reserve ; we will sup¬ 
pose you fail to -pay to the Guardian Life Insurance Company or 
that they bought up your policy, paying you any thing less than the 
$200 ; we w T ill suppose they bought up the policy and paid you what 
is nearer the truth, $120; there was a saving of eighty dollars on 
the transaction; now I receive, by the terms of that contract, a portion 
of that profit, I think it*was fifty per cent, until the money I put in 
was paid back; if you continued to pay there would be the sixteen 
dollars a year coming to me, and if you failed to pay into the 
Guardian Life Insurance Company, the policy forfeited to us, or if 
it was bought up, there was a saving, and half of that went to me; 
so I get sixteen dollars of your premiums if you continue to pay, 
and 1 get forty dollars if the policy was bought up, until the money 
was refunded to me. 

Q. Well, let us see where the little joker is; the Universal got 
$3,200,000 of the reserve? A. Yes. 

Q.. It reinsured $3,200,000 of the Guardian policies to that extent? 
A. Oh, no; I said it reinsured eighty per cent. 

Q. And, in that agreement, when the $3,200,000 was paid over to 
the Universal, if the Universal paid you twenty per cent of that, 


453 


tlie Universal was carrying those policies twenty per cent less than 
they ought to, were they not; if the reserve they got was equal to 
the insurance they got, and when they got that they paid you twenty 
per cent of it, they were carrying the policy at eighty per cent, 
weren't they ? A. But they did not pay me twenty per cent of the 
$3,200,000. 

Q. They paid you 20 per cent of what they received ? A. No ; 
they did not pay me any thing; now, suppose that transaction takes 
place to-day, to-morrow you come and pay your premium to the 
Guardian Life Insurance Company of $100; the next day they pay 
it over to the Universal Life Insurance Company; I get 20 per cent 
of the premium on the $3,200,000. 

Q. Of every $100 the Universal gets, you get $20 and they get 
$30 ? A. Yes, sir. 

Q. That is on every dollar, and they are carrying dollar for dollar 
they received in insurance ? A. No ; let me enlighten you a little 
on the subject of life insurance: the premiums of the Guardian 
Mutual Life Insurance Company, like the premiums of all mutual 
companies, are loaded at from 30 to 40 per cent, and as long as the 
Universal Life Insurance Company got the net rate, they were get¬ 
ting all the law supposes they get; in other words, this premium of 
yours of $100, which you stipulated to pay to the Guardian Mutual 
Life Insurance Company, is composed of two parts, first, what we 
call the net premium, that is, the amount it is absolutely necessary 
for the company to receive— 

Q. That is equal to the reserve, is it not? A. No, it is entirely 
different; the net premium on your policy of $100, supposing it to 
represent an ordinary mutual rate, the net rate is $70, and the load¬ 
ing about $30; now the law, in its wisdom, says, “ gentlemen, you 
are going to get $70 from the man we say, “ we have contracted 
for $100;” the law says, “I don’t care about your contracts; you 
may have contracted to receive $150, or to receive $200, or to 
receive $1,000,000 a minute ; the law says you get seventy dollars a 
year;” very good ? now the Guardian Life Insurance Company pays 
us eighty per cent of the seventy dollars and eighty per cent of the 
thirty dollars; they pay to us fifty-six dollars, which represents 
eighty per cent of the net, and they pay us twenty-four dollars, 
which is eighty per cent of the loading; the law says we are not 
going to get it, and it don’t take it into consideration, and don’t give 
us any credit for it; the Universal Life Insurance Company simply 
takes it at its word and take the fifty-six dollars and put it aside for 
the reserve; they give me sixteen dollars of the twenty-four dollars, 
which the law don't admit we are-going to get .any how, or if we do, 
we are going to spend and keep the other portion. 

Q. Assuming that, and the day after the contract is made the 
true state of affairs in the Guardian is discovered and a receiver is 
appointed? A. Well? 

Q. You have got to insure the persons at the ordinary rates of 
premiums, including the loading, if you reinsure them ? A. Let me 
see if I can’t explain that. 

Q. Now, assume that,a receiver is appointed the next day, and 


454 


you are obliged to reinsure the eighty per cent your company has 
taken; it you are obliged to reinsure it you are obliged to pay the 
usual rates, are you not ? A. What do you mean by saying “ you 
are obliged ?” you say “ if you are obliged to reinsure it;” what do 
you mean by that ? 

, Q. I mean just what I say; if you are obliged to reinsure it you 
would pay the usual rates, would you not ? A. Why, what has the 
receiver of the Guardian Life Insurance Company to do with the 
Universal Life Insurance Company ? 

Q. The Universal has assumed a liability which represents eighty 
per cent of the Guardian liabilities ? A. Yes, and we have $3,200,- 
000 to cover it. 

Q. But you have $650,000 in addition to cover ? A. Exactly. 

Q. Well, if you have to reinsure you would have to pay the full 
rates, would you not ? A. Probably have to pay the full amount of 
the reserve. 

Q. You would have to pay the reserve and loading too, wouldn’t 
you? A. Oh, no. 

Q. Did you ever know of an insurance company reinsuring another 
company for simply the reserve: don’t they require the loading in 
addition? A. No, of course not; that represents the liability up to 
that time. 

• • 

Q. Well, the future loading has to be paid? A. The premium 
has to be paid. 

Q. The premium includes the loading ? A. Certainly. 

Q. And in the future the gross premium has to be paid ? A. Oh, 
no, no, no. 

Q. How much then ? A. Well, for instance, we will take the very 
policy you were speaking of first; now, to illustrate the fact, we will 
suppose that we make up your amount, and we do not want to carry 
that policy, for any reason ; we will suppose, for instance, it was a 
policy for $5,000 or a policy for $4,000; the mutual rate would be 
not far from $100; that is the mutual rate, do you understand ? 
Now, the Universal Life Insurance Company’s rate, upon the same 
amount of insurance at the same age, would only be about seventy- 
five dollars, owing to what I told you before; now we assume $3,000 
of that policy; I will call it $4,000 for convenience of figuring; we 
will call your rate eighty dollars, for the sake of figures', they pay 
us eighty per cent of the $100, that is, eighty dollars, but we have 
only assumed $4,000; our rate on a $4,000 policy, being the rate on 
the policy at mutual rates and one-fifth off, will be eighty dollars ; 
our rate on the same policy would be about sixty dollars; that is the 
rate the Universal Life Insurance Company would charge you for 
insuring your life at that age, owing to the difference in the rates; 
in other words, when the Universal Life Insurance Company has 
got from the Guardian Mutual Life Insurance Company the eighty 
dollars, that eighty (80) per cent of the risks, and has paid me the 
sixteen dollars, they have got left just.as much as they would charge 
you to write the risk in the first place; suppose we want to go and 
•reinsure that risk in some other company; we have been In the 
habit frequently of writing policies for more than we were willing 


to carry, like other companies; we have reinsured those policies at 
our own rates, twenty per cent lower than the mutuals, and get an 
allowance of twenty per cent on the first premiums and seven and a 
half on renewals; here is the mistake; in writing a risk and bar¬ 
gaining for eighty per cent of the mutual rate, we get twenty-five 
per cent more than our regular rates on the risks, and the company 
can afford as a matter of speculation to give me all they receive 
more than regular rates. 

Q. Suppose a receiver is appointed and the court decides the 
receiver shall reinsure those risks? A. For the Guardian Life Insur¬ 
ance Company ? 

Q. Yes? A. Now we get down to business; what is the contract 
between the Guardian Life Insurance Company and the Universal 
Life Insurance Company? The contract between the Guardian Life 
Insurance Company and the Universal Life Insurance Company is 
that they shall pay these premiums to the Universal Life Insurance 
Company, and when they fail to continue to pay these premiums to 
the Universal Life Insurance Company, the policy is forfeited; do 
you see that ? 

Q Yes? A- Yery good; suppose that the Guardian Mutual Life 
Insurance Company goes into the hands of a receiver for these defi¬ 
ciencies, any of the deficiencies that existed in their assets we did not 
discover; if the receiver sees fit to continue to pay the premiums to 
the Universal Life Insurance Company, the contract continues to the 
amount of eighty per cent of the amount we have agreed to reinsure; 
if he does not see fit, the policy is forfeited under the contract the 
company holds. 

Q. Supposing the company pays the money to the receiver, and 
the receiver does not pay it over to you, you can’t forfeit the policy 
as against the policyholder? A. Well, that is'a question of law. 

Q. Suppose the insured pays over his premium regularly to the 
receiver, and he does not pay it over to you, you can’t forfeit that 
reserve, can you ? A. That I don’t understand ; that is something I 
would rather have the opinion of the Court of Appeals on. . 

Q. The short of it is, this $650,000 was to be paid over out of the 
rate the insured was paying bejond the usual rates, or out of the 
reserve if the policy was forfeited or purchased? A. Yes, it was out 
of the legal business. 

Q. Well, you say you put up $650,000 ; in what way did you do 
that ? A. Three hundred and thirty thousand dollars was paid in a 
check which was certified, and $320,000 was paid in the mortgages. 

Q. Now, $320,000 was paid in a certified check you say? A. Yes. 

Q. Whose check was it ? A. My check. 

Q. On what bank ? A. The American Exchange National Bank. 

Q. Was it certified ? A. Yes, sir. 

Q. By that bank? A. Yes, sir. 

Q. Did you have that amount of funds there? A. I had that 
amount there, or they never would have certified it in God’s world. 

Q. You had that amount there of your own money? A. Of my 
own money. 

Q. VV as there ever one dollar of that money contributed by any 


456 


other company ? A. No other company in any way, shape or man¬ 
ner, nor any officer of any other company in any way, shape or man¬ 
ner had any thing to do with the transaction. 

Q. How long had you had that $330,000? A. Do the committee 
require me to go into my private affairs ? 

The Chairman — We do not, sir, and I rule that question out of 
order. 

Q. From what source did you obtain that money? A. Isn’t that 
the same question again ? 

The Chairman — That has nothing to do with the subject we are 
investigating. 

The Witness —I will say to the committee very frankly and unre¬ 
servedly, as I understand the point you want to get at, that the money 
never came from any other insurance company in any way, shape or 
manner. 

* 

Mr. Moak —Does the committee decide that I shall not have an 
answer to my question ? 

The Chairman —The committee decides, so far as I have anything 
to say, that any question so far as life insurance is concerned, is 
proper, but no question as to his private means ; so far as his person¬ 
al means are concerned, it is not a proper subject for inquiry, as the 
committtee have nothing whatever to do with it, so long as the money 
did not come from any life insurance company. He has answered 
the question emphatically, and to ask him to stultify himself is asking 
a little too much. You are to put any question in regard to life in¬ 
surance, or as to any companies he is interested in, and the commit¬ 
tee will not object to it; but the committee are not desirous of going 
into any statement as to his private affairs. 

Mr. Moak — If the committee will give me instructions as to 
whether I may put the question or not, I will know what to do, and 
if it is not to be answered I will pass on to another question. 

The Chairman —The chair will rule, subject to the decision of 
the main committee, that it is not a proper question to be put to the 
witness. 

Mr. Floyd-Jones —After the answer he has made, that he did not 
get the money from any life insurance company in any way, shape 
or manner, I don’t think it necessary to put the question. 

Mr. Moak —If it is decided the question is not proper I will go- 
to something else. 

The Chairman —I have given the ruling. 


457 


Q. You say you put up $320,000 in money? A. No; $330,000. 

Q. I understood you to say the check was $330,000? A. Yes, so 
I did; the check was $330,000 and the mortgages were for $320,000. 

Q. What mortgages were those you put up ? A. I will go into 
that very freely for you, Mr. Moak; when I first commenced to look 
into the affair I was assured by a gentleman connected with the com¬ 
pany that the deficiency was not more than from $300,000 to $350,- 
000; we found it, apparently, $650,000, as I have before told you ; 
and Mr. I. S. Homans, who was one of the directors of the com- 
pany, put up the $320,000 additional amount in mortgages. 

Q. That is, he gave mortgages on real estate for $320,000? 
A. No; they were mortgages lie held and turned over to the com¬ 
pany. 

Q. That he held and assigned to the company ? A. Yes. 

Q; Then virtually, he put up that amount ? A. Certainly ; when 
I said I did this, I meant procured it to be done; I want you to un¬ 
derstand that; I stated there were two contracts made —ohq provid¬ 
ed for $320,000 and the other for $330,000; when I said I received 
twenty per cent from the company I combined the two contracts and 
treat them as one. 

Q. What portion of the twenty per cent were you to receive ? 
A. One of them called for ten per cent and the other for ten per 
cent; that is, if they did call for that amount. 

Q. \ ou were to receive a half ? A. Both contracts were made 
the same, and I assigned one of the two to him. 

Q. In that way your $330,000 was to be paid and his $320,000? 
A. Precisely. 

Q. Was that check of $330,000, every dollar of it, drawn from 
the bank? A. Yes, sir, every dollar. 

Q. For what purpose was it used? A. It was-turned over to the 
Universal Life Insurance Company. 

Q. In the Universal Life? A. Yes; and I said this $650,000 went 
into the Universal as part of the $3,200,000. 

Q. Was the $330,000 you put up repaid to you ? A. Yes, sir. 

Q. In what way ? A. Under this contract. 

Q. Did you receive the whole of it in the ten per cent and the 
reserve which became forfeited ? A. Yes, sir. 

Q. Every dollar was paid that way and no other? A. That is, it 
accrued under the contract; under the terms of the contract. 

Q. How soon was that amount paid to you ? A. A little over a 
year, I think ; I think about fifteen months. 

Q. About how r soon after that did Mr. Homans receive his share ? 
A. That continued in existence, I think, until last year. 

Q. Did he receive his share as soon as you did yours? A. No, he 
did not; his share was paid back to him in the same securities he 
put up. 

Q. Then the company did not get the benefit of that $320,000 at 
all ? A. Oh, yes, they did. 

Q. If these securities were pased over, and then paid back again, 
how did the company receive any benefit? A. What difference did 
it make to them whether they paid him back in the securities he put 


/ 


458 


/ 


up, or in money; let me make an explanation here; you are a busi¬ 
ness man, Mr. Moak, let me disabuse your mind of an erroneous 
idea, gentlemen of the committee, if you have one, and I think you 
have.. If you ask me the question, did the money paid into the 
Guardian Mutual Life Insurance Company aid it in a commercial 
point of view, or do it any good commercially, I answer it did not, 
not a particle; it did it no more good than if it had put up a million 
of dollars of its securities and borrowed the money; let me explain 
it to you right at this point, because it will settle a good many ques¬ 
tions that may arise hereafter, as I suppose you will go over the 
North America Life Insurance Company the same way; I will show 
you what good it did do, and how it did it, and that it did it, com¬ 
mercially, no good at all; the trouble is, you don’t understand the 
life insurance business. 

Mr. Lang —No, the more you go into it the less you know of it. 

Witness —That is my case precisely ; I have been in it eleven 
years, and am just beginning to find it out; but let me explain: here 
is a life insurance company that is in receipt of a million dollars a 
year from its premium receipts ; it has got $4,000,000 of reserve on 
its outstanding* policy obligations ; its premium income is a million 
dollars a year; its assets are $3,400,000 we will say for the sake of 
figuring; the Superintendent of the Insurance Department comes down 
there and says, after looking into their affairs: gentlemen, you are 
$600,000 short; I must wind you up, shut you up; I happen to be 
standing by, and I say, Mr. Superintendent, how do you arrive at 
that fact, that the company has liabilities of 84,000,000; why, they 
don’t owe $150,000 in the world to my certain knowledge ? Oh, but, 
he says,'the law says the liabilities are $4,000,000. Well, how does 
the law get at that ? they have got $30,000,000 in outstanding poli. 
cy obligations, upon which the policyholders have contracted to pay 
to them $700,000 a year in premiums; now the present worth of 
$30,000,000, discounted at four and a-half per cent, is so much; the 
present worth of $700,000 after a certain number of years, running 
over the existence of several lives, covering that is so much; in other 
words, their obligations are so much, and the present value of the 
premium income is so much ; the difference is $4,000,000, and that 
is what they ought to have; oh, I say, you have made a little error 
here; you say that they contracted to receive from the policyholders 
in the future $700,000; they have contracted to receive a million ; 
he says, I don’t care what they have contracted to receive ; the law 
says they are going to receive $700,000 ; in other words, the law 
does not take into consideration what the real terms of the contract 
are; it does not look at the contract; it does not look at the policy 
of insurance at all; it is very evident to you if any company insures 
a man at the age of thirty, for $10,000, and contracts to receive from 
him $500 a year as long as he lives, and another company the same 
day issues another policy on his life, and contracts to receive $800 a 
year, that, at the end of any given length of time, for instance, 


459 


four or five years, from the date of issue of the policy, that the com¬ 
pany which has contracted to get from him the $800 a year as long 
as he continues to live, don’t need as much money on hand now as 
the company which is only to receive $500 ; is that plain ? 

Q. I don't think it is, if each company has to have an equal 
reserve ? A. I am talking about commercially, not legally ; legally, 
this did do it good ; commercially, it did not; commercially, the 
company to which that man has agreed to pay $800 a year as long 
as he lives, don’t need to have as much money on hand to-day as the 
company to which he has agreed to pay $500 ; don’t you see that ? 

Q. No, I don’t see that, because the standard which the State 
fixes as the liability of each company is precisely the same ? A. 
But eliminate this question of legal liability; I am talking about the 
commercial effect purely; for instance, if you have got a note to pay 
10 years from now of $5.01)0, or if you have got a note tq pay a year 
from now of $5,000, and you can put away $800 a month to meet 
it, you don’t have to have as much on hand to-day to meet it as the 
man who can only put away $500 a month. 

Q. That may be all very true, yet both of them have to pay 
$10,000? A. Well, we will take the liability and say each man has 
a note of $10,000, payable 10 months from now, without interest; 
we now leave the question of any monthly income out of the question, 
one man is going to get $800 a month, and in ten months he will 
have $8,000, so he ought to have $2,000 to start with now in hand; 
the man who gets but $500 a month will, at the end of ten months, 
have $5,000, so he ought to have $5,000 on hand to start with. 

Q. Still, if the man has got to have $5,000 assets in order to get 
the other $5,000 in, I don’t see it makes any difference; this Guar¬ 
dian Life Insurance Company had so much to pay, did it not ? A. 
Yes. 

Q. It had so much assets to pay it with, had it not?, A. Yes. 

Q. When it surrendered its assets to you, and you agreed to pay 
only a part of its debts, I fail to see how any tiling is made by that 
transaction, because it has its debts to pay ? A. Let us get back to 
the question I was explaining; I will state to you frankly, gentle¬ 
men of the committee, that where you get into a subject involving 
this technical and theoretical principle of value of life insurance 
companies, which you have got to get in order to understand this 
matter, you must be very patient. 

Q. How soon after the contract was made with the Universal was 
it that any effort was made to obtain any surrender of policies of the 
Guardian, and to obtain the taking of policies in the Universal? A. 
In reply to that question, I will state to the committee that imme¬ 
diately after this contract was made, the condition of the Guardian 
Mutual Life Insurance Company was stated frankly and fairly. 

Q. Will you please answer my question? A. I say immediately 
after the condition of the company was stated the policyholders 
• were offered an opportunity to change if they wished. 

Q. To what extent did they make that change, within one year or 
two years ? A. I can’t tell you. 


460 


Q. Well, approximate ? A. It is a branch of the business that 
does not come under my observation at all. 

Q. Well, who would know? A. Charles P. Griffin, general man¬ 
ager, would know that. 

Q. Was it not a fact that the larger proportion of the two, of the 
policies of the Guardian were surrendered within a year, and poli¬ 
cies of the Universal were taken? A. A large number of them 
were. 

Q. Were not over a half of them? A. No, I don’t think they 
were. 

Q. Well, was there one-third of them ? A. I cannot tell you. 

Q. Was not this arrangement made, that if a policyholder would 
surrender his policy, the Universal would give him a policy upon 
which the premium would be deemed paid for two years ? A. Oh, 
no. 

Q. What was the real contract made ? A. Every case stood upon 
its own merits entirely ; for instance — # 

Q. Was it not a fact that a large number of policies of the 
Guardian were surrendered on substantially that arrangement with 
the Universal, and Universal policies given in place of them? A. 
Upon the surrender of the Guardian policies in some cases, it would 
pay the premiums ahead for months, and in some cases ten or twelve 
years. 

Q. Can you mention a case in which you paid it for ten or twelve 
years? A. No, I cannot mention a case. 

Q. About what proportion of the reserve was applied to the pay¬ 
ment of premiums in the Universal of the reserve standing to the 
credit of the policies in the Guardian ? A. The average of all pol¬ 
ices we show have paid not far from seventy to seventy-five per 
cent. 

Q. That was paid by crediting premiums in the Universal ? A. 
Yes, by giving him credit in the Universal on his policy. 

Q. In other words, you insure a man in a cheaper company md 
give him seventy per cent of the reserve ? A. No, we give him the 
benefit of the lightest rates; we do not charge him the mutual rates 
at all. , 

Q. You do not give him the benefit of the reserve when he starts ? 
A. Yes, we did when he started. 

Q. Say his premium was $350 ; you did not credit him at $350 ? 
A. We issued to him a policy on his life in our company, charging 
him our regular rates and giving him credit for $350. 

Q. Well, what would become of the other $150 ? A. That went 
into the Universal. 

Q. Are you acquainted with that signature [letter produced] ? 
A. Yes, sir. 

Q. What is it? A. It is the signature of the actuary of the 
Universal, G. L. Montague. 

Q. Is that a policy of the Universal [paper produced] ? A. 
Yes, sir. 

Q. Was it not a fact that this man was paid less than fifty per 


461 


cent of its resarve ? A. I cannot tell you; if you will let me look 
at the case I can give you the particulars. 

Q. It is the case of Gersham Oppenheim ? A. It is a question 
that is absolutely impossible for me to answer; here is a policy 
handed to me, and 1 don’t know as lie was ever insured in the 
Guardian Mutual Life Insurance Company. 

Q. Who is Mr. Bewley ? A. He is the secretary of the Universal 
Life Insurance Company. 

Q. Well, now, you cannot say whether that man was ever insured 
in the Guardian or not ? A. Ho. 

Q. Will you say he was not insured in the Guardian and surren¬ 
dered the policy on which he was paid less than fifty per cent of the 
reserve? A. Certainly not; I will not say so, because I don’t know 
that he ever was insured. 

Q. About what was the actual amount of insurance of the Guardian 
at the time this arrangement was made ? A. The actual insurance 
liability was about $28,000,000. 

Q. How soon after that arrangement was made was the Guardian 
put into the hands of a receiver ? A. About three years. 

Q. At the time when the Guardian was put into the hands of a 
receiver how much was its assets? A. That I can’t tell you. 

Q. About how much ? A. That I can’t tell you. 

Q. Your company had control of it, did they not? A. Yes, and 
I will tell you why I can’t tell you; the Guardian Mutual Life In¬ 
surance Company had previously reinsured the Hew York State Life 
Insurance Company; the Widows’ and Orphans’ had previously re¬ 
insured the Reserve Mutual, and the Reserve Mutual had reinsured 
in the Guardian, so that it comprised the Hew York State Life, the 
Reserve Mutual, and the Widows’ and Orphans’. 

Q. The whole three of them have gone into the hands of a receiver, 
have they not? A. Yes, sir. 

Q. How much was the assets of all of them? * A. One million 
or one million two hundred thousand dollars, I think. 

Q. The assets, when the arrangement was made with your com¬ 
pany and the Guardian—its assets were about how much; I mean 
the assets of the Guardian ? A. You mean the Guardian and the 
Widows and Orphans’. 

Q. I mean the Guardian proper ? A. Well, that comprises all the 
assets. 

Q. At that time the company had reinsured all of them? A. Yes; 
there was about $3,200,000 or $3,300,000, I should say, in round 
numbers. 

Q. Did that comprise all the assets of the whole three ? A. Yes; 
of all four. 

Q. And the whole four went into the hands of a receiver within 
what length of time ? A. Do you mean ago, or from the time that 
the contract was made ? 

Q. From the time the contract was made ? A. Three years. 

Q. At the time that they went into the hands of a receiver there 
was from $1,000,000 to $1,200,000 in all ? A. Yes. 

Q. Then what had become of the $2,000,000 that had disappeared 


462 


in the meantime? A. The $2,000,000 that had*disappeared had 
been paid in death losses, and matured endowments and surrendered 
values. 

Q. How much was the aggregate liability of the four at the time 
your company made the arrangement; you have said $28,000,000, I 
believe ? A. That was the reinsurance. 

Q. How much was the aggregate insurance of the four when they 
went into the hands of a receiver ? A. About $5,000,000. 

Q. And was that the aggregate insurance of all of them ? A. That 
was the aggregate of the insurance of all of them; I know it was 
less than $6,000,000. 

Q. The balance of the policies have been either surrendered, for¬ 
feited or paid in consequence of being matured by death ? A. Yes ; 
and endowments matured. 

Q. That is where there is any endowment issued by them ? A. 
Oh, yes. 

Q. Were there any endowments issued by them ? A. Yes. 

Q How much * A. I can’t tell. 

Q. Can’t you approximate as to what was paid on endowment 
policies? A. What do you mean ? 

Q. There were certain endowment policies when you made the 
contract? A. Yes. 

Q. I ask you if you can tell how much was paid on the endow¬ 
ments from the time you took the contract until they went into the 
hands of a receiver ? A. I could not tell. 

Q. Can you approximate ? A. Ho. 

Q. Can you approximate as to how much was paid on policies that 
became .due by death ? A. I think about $800,000 ; I guess a little 
more than $800,000. 

Q. And the balance of your policies have been either forfeited or 
surrender values paid for them ? A. Yes. 

Q. Either paid in money or in reinsurance in the Universal ? A. 
Yes. 

Q. How much of them had been forfeited by non-payment; to 
what extent ? A. I could not tell. 

Q. You can’t approximate it ? A. I will simply say upon that 
squarely, that the amount of forfeitures of the Guardian Insurance 
Company, and the same is true of the North America, has been small 
comparatively—that is, I don’t think it has exceeded that of the 
average of all companies. 

Q. About what is the average ? A. About ten or twelve per cent. 

Q. Of policies in numbers? A. Yes, of each year. 

Q. Then during the three years there was forfeited from thirty to 
thirty-six per cent? A. Ho, for instance, if you stait with 12,000 ; 
and you forfeit ten per cent, you forfeit 1,200; the next year you 
have 6,000, ten per cent of that would be 600; and the next year 
you may have 4,000, and ten per cent of that would be 400, which 
would be less than twenty per cent of what you started with. 

Q. You are stating a suppositious case; I want to know whether 
it is true in this case ? A. I don’t think the absolute forfeitures of 


463 


the Guardian would exceed twelve per cent of the policies they had 
in number. 

Q. What per eentage of them in number were surrendered and a 
money value paid ? A. I can’t tell you. 

Q. Can you approximate ? A. No, you can get at it by looking 
at the report ? I don’t carry the books in my head. 

Q. After the arrangement was made in regard to the Mutual Life 
Insurance Company it kept on witli its business under the same name 
until a receiver was appointed? A. Yes, sir. 

Q. Were you a member of its direction? A I was. 

Q. Who was president ? A. Andrew W. Gill. 

Q. Who was president when the contract was made ? A. Andrew 
W. Gill. 

Q. Did he continue its president down to the time it was wrecked ? 
A. Wrecked; I don’t know what you mean; I don’t understand 
you ? 

Q. Down to the time the receiver was appointed ? A. Yes. 

Q. What difference do you make in the term wrecked and the 
appointment of a receiver? A. I think it is an obnoxious term and 
I don’t know whether you mean to imply that I wrecked it; can I 
give you an explanation on that matter; I want it distinctly under¬ 
stood that I never wrecked any life insurance company. 

Q. Well, did you act in any capacity in regard to the business of 
the Guardian except that of director ? A. No, sir. 

Q. Did you have charge of procuring the surrender of policies? 
A. No, sir. 

Q. Did you have charge of the change of policies from one com¬ 
pany to the other? A. No, sir. 

Q. Did you or your company, the Universal, receive any thing on 
account of the change, except what they made by getting the reserve? 
A. No; do you mean me, personally ? 

Q. Yes? A. No. 

Q Did your company ? A Yes. 

Q. Any thing other than they made under the contract ? A. No, 
sir. 

Q. What were the agents paid for obtaining the surrender or change 
of these policies; or I would ask you this question: what was the 
regular number of agents of your company ? A. I suppose some 
seventy-five or 100 or 125. 

Q How much was the most paid to any one of them for obtaining 
a surrender of policies in one company and the issue of policies in 
another ? A. The rates of commission I am not familiar with ; it is 
not in my department. 

Q. Well, who would know about it? A. Charles P. Griffin, the 
manager of agencies. 

Q. Do you mean to say, as director of one company and vice-presi¬ 
dent of another, that you had no idea of the amount paid for com¬ 
missions ? A. I mean to say, as vice-president of the Universal, I 
managed that branch of the business under my charge ; I expected 
the other officers to do the same, and don’t pay any particular atten¬ 
tion to the transactions or business of that department. 


464 


Q. Do you not have a general knowledge of the business of the 
company ? A. Yes, sir. 

Q. And you did not know the commissions paid ? A. I think it 
was not less than ten per cent, nor to exceed thirty; my impression 
is it is from fifteen to twenty per cent. 

Q. Fifteen or twenty per cent of what ? A. Take the case of a 
person surrendering his policy in the Guardian ; we will suppose the 
reserve was $350; that was for the surrender of the Guardian poli¬ 
cies; he takes out a policy in the Universal, and if his premium was 
fifty dollars a year, it would pay his premium for seven years, because 
the interest would be added; now the agent that procures that would 
get the first year’s commission on it just as if he brought a risk into 
the company. 

Q. Or, in other words, for inducing the change he got precisely 
the same rate as he would for a new risk ? A. Ho, he did not. 

Q. What was the difference? A. My impression is there was 
about a difference of ten per cent. 

By Mr. W eiant : 

Q. In favor of the agent ? A. Favorable to the company. 

Q. Mr. I. Smith Homans, whom you have named here, was he con¬ 
nected with any insurance company ? A. He was one of the direct¬ 
ors of the Guardian Life Insurance Company. 

Q. At that time? A. Yes. 

Q. He put up securities to the amount of $320,000? A. Yes. 

Q. He was interested in the contract with you ? A. Only to get 
his money back. 

Q. Was he not a party to the contract? A. Ho, but I assigned 
one of the contracts to him. 

Q. Do you know or have you information as to whether these 
securities put up by Homans were in any way, directly or indirectly, 
the property of any life insurance company? A. I know they were 
not; no life insurance company had had any interest in them in any 
way, shape or manner. 

Q. You claim to have stated that the rates of insurance in the 
Universal were less than those in other companies ? A. I said in 
mutual companies. 

Q. Are you speaking now of the rates that were first established 
by the Universal? A. Yes, or those that are being used now. 

Q. Has not the Universal changed its rates? A. Perhaps, orig¬ 
inally, when they first started in 1865, when they first adopted stock 
rates, the rates were about twenty-five per cent less than the rates 
charged by mutual companies ; there has been a change of about 
five per cent since. 

Q. The question is, whether the L T niversal has ever changed its 
rates? A. Oh, yes, slightly. 

Q. To what extent? A. I should say five per cent; that is it 
has adjusted them, more properly speaking. 

Q. Did you not think the original rates were sufficient to pay the 
company ? A. No. 


465 


Q. And what was the reason of tlie change? A Out* rates were 
too old on young ages and too high on older ages , and they were 
readjusted. 

Q. Then you mean to say your first rates were not properly ad¬ 
justed so as to pay the company ? A. No, that is not it; when this 
company was started, in 1865, the law of the State of New York 
had adopted a table, uritter which the policies were valued, called the 
combined experience table, with interest at five per cent; some 
three or four years after that it was changed to the American expe¬ 
rience tables, at four and a half per cent; that led to the readjust¬ 
ment of the rates. 

Q *Was that the sole reason? A. Yes, sir, I think it was the 
sole reason. 

Q. When you reinsure in other companies, do they reinsure your 
risks at your rates ? A. Yes, at our rates. 

Q. And have you done that always? A. Yes, sir. 

Q. Even when your rates were lower? A. Yes, they give us stock 
policies; we claim no dividends. 

Q. You issue no policies on which interest is paid in the shape of 
dividends ? A. Ours are purely stock policies, sir. 

Adjourned until Thursday morning, April fifth, at 9 o’clock. 




466 



Thursday, April 5. 

The committee met on Thursday morning, at nine o’clock. 

Present, the full committee. 

Examination of Henry J. Furber resumed : 

w 

By Mr. Moak : 

Q. At the time when the Guardian went into the hands of a 
receiver, can you approximate to the number of policies of that com¬ 
pany which were in existence ? A. I stated that yesterday, about 
5,000, as near as I can remember, and when I say Guardian, under¬ 
stand I mean the Guardian, Reserve Mutual and Widows and 
Orphans’. 

Q. The Guardian and the three it swallowed ? A. Yes, sir. 

Qr Of the whole four there were 5,000 in existence ? A. My 
impression is, it was 3,000, 4,000 or 5,000. 

Q. How much insurance did they represent, the whole amount ? 
A. Five million dollars of insurance. 

Q. You cannot state the number of policies? A. Ho, I don’t 
know' the number. 

Q. At the time that company went into the hands of a receiver, 
was the reserve of the policies of the four companies which had 
been in existence, and not surrendered, intact ? A. Ho, sir. 

Q What portion of the reserve on those policies existed ? A. I 
cannot answer that question for the reason that we have not made 
up the reserve on those policies; that is being ascertained by the 
receiver. 

Q. Can you approximate ? A. Oh, it is a guess on my part. 

Q. You can tell better than a man who knows nothing about it ? 
A. I presume I can. 

Q. Give us your best remembrance? A. I should say, at a guess, 
somew'here in the neighborhood of $1,500. 

Q. What per cent of the reserve ? A. That remained intact. 

Q. Yes; of the reserve on all the policies of the four companies 
that were in existence ? A. I should say, at a guess, somewhere in 
the neighborhood of seventy-five per cent—seventy per cent—some¬ 
where there. 

Q. You stated at the time the Universal made the contract with 
the Guardian there were large deficiencies you did not discover on 
examination ? A. Yes, sir. 

Q. What was the character of those deficits? A. In the first 
place, losses we knew r nothing about. 

Q. You mean losses upon policies? A. Yes; losses by death in 
excess of the amount given. 


> 


467 


Q. How much loss by death ? A. I should say somewhere in the 
neighborhood of $200,000. 

Q. Were not the proofs of those losses in the office of the com¬ 
pany ? A. I presume so. 

Q. But were not exhibited to you ? A. Hot exhibited to me. 

Q. Then an examination of an insurance company by any person, 
no matter how expert he may be, if the officers fail to present a true 
statement of the affairs of the company, would show a false result ? 
A. It is a matter very easily determined by an examination of the 
record- 

Q. Suppose a man dies, and the information is sent to the com¬ 
pany, but it is not recorded ? A. That loss would be marked off on 
the policy register of the company. 

Q. Suppose it was not ? A. If it was not, I don’t know how it 
could be determined. 

Q. Were those marked off? • A. Yes, sir. 

Q. And yet you did not discover them? A. Yes. 

Q. You stated there was $200,000 that way; what else? A. 
Shrinkage in the premium note account; it was stated at a larger 
amount than it really was, including policies which were defunct. 

Q. In other words, the man who made the statement of the pre¬ 
mium notes had included notes which were defunct? A. No; the 
company keeps a ledger account, and to that account is charged all 
the premium note income of the company. # 

Q. You mean premium notes? A. Yes. 

Q. And interest? A. Without the interest; that is carried to an 
interest account; the face of the premium notes received from time 
to time is charged up to the account; any premium notes used in the 
payment of policies, or payment of death claims, or the payment of 
dividends, is charged off that account; the company should charge 
*off on that account the premium notes that become void or defunct, 
by the forfeiture of the policy, and unless a great deal of care is 
taken to test that at short periods of time, the premium note account 
by the ledger is likely to overrun; that is, a policy is forfeited, and 
the premium note is not charged off the account by an oversight; in 
the best companies that will happen unless it is very carefully 
watched, and checked by scheduling the account ; you will find the 
premium note account will overrun ;—I had not time, when I went 
in, to discover and test them, and as it is a matter of books I overlooked 
it. 

Q. About how much was their loss from that source? A. About 
$75,000. 

Q. That makes $275,000 ? A. Yes. 

Q. You have stated here two or three times that you had not time 
to ascertain these deficits, although they were stated on the books of 
the company ? A. On the papers of the company; yes. 

Q. In an affair of this importance, involving millions of dollars, 
why was there any necessity for closing the contract so rapidly that 
you could not take the time necessary to ascertain the exact state of 
affairs; or in other words, why was so important a contract made 
without sufficient time being taken to get at the exact state of affairs, 
30 


468 


as a man would if lie was going to buy a farm ? A. Simply for this 
reason : as I stared, my attention was called to the company in the 
latter part of February; it was necessary for the Guardian Life 
Insurance Company to make its statement by the first of March, or 
the first few days in March, to the Insurance Department, and what 
was to be done had to be done before the statement was made ; in 
other words, the time had come to render its annual account; it 
would have taken, to have gone over the things carefully and thor¬ 
oughly, two or three months at least. 

Q. That being so, it might be a very good reason why some one 
who had special interest in the Guardian should act promptly, but 
what reason was it why the Universal should involve itself in the 
troubles of the Guardian ? A. I thought I stated that; I stated to 
you that the Universal Life Insurance Company assumed eighty per 
cent of each of the policy obligations of the company, and my ex¬ 
amination of the company satisfied me that they had funds enough 
to take care of the eighty per cent of the obligations, by taking the 
assets at the time, and, having assumed eighty per cent of the policy 
obligations, we thought we were safe in that; we felt confident from 
the examination we made they could take care of eighty per cent, 
and we only pledged ourselves to that extent. 

Q. Here iis the point; when your company, the Universal, 
assumed that obligation as I understand the law, any policyholder in 
the Guardian could have sued your company, under the case of 
Lawrence against Fox, and recovered eighty per cent of the loss. A. 
Ho. 


Q. Why ? A. Simply because the case of Lawrence against Fox 
don’t apply; this was a contract with the Guardian Mutual Life In¬ 
surance Company to pay to the Guardian Life Insurance Company 
any loss it might sustain and have previously paid on its policy obli¬ 
gations outstanding; just precisely the same nature'of contract as is • 
made every day in the ordinary affairs of the business; for instance 
one company writes a risk for $20,000, and don’t wish to carry but 
$10,000; they reinsure $10,000 of the risk in another company ; 
when he dies he cannot sue the reinsuring company ; he must proceed 
against the company which insures the risk. 

Q. How, did your company assume to pay eighty per cent of 
every class of policy enumerated in a certain schedule, or was the 
agreement generally to pay eighty per cent of all losses which it 
should sustain ? A. The agreement was to pay eighty per cent of 
the losses which the Guardian Mutual Life Insurance Company 
might sustain upon all and every one of its policy obligations out¬ 
standing on the first of January, 1874. 

Q. Did you not regard yourselves as being liable to be imposed 
upon that way; might there not be policies outstanding that you 
never heard of ? A. Ho; that clause of the contract was to continue, 

I think, until the first day of July following, by which time the 
Guardian Mutual Life Insurance Company was to deliver to us a 
complete list of every policy obligation outstanding, and from and 
after the date when they delivered us that list, our reinsurance ex¬ 
tended to such policies as were incorporated in that list. 


469 


Q. Well, even then, you run the risk of their having policies you 
did not know of, which might be put in the list on the first of July? 
A. Our contract called for their payment to us of eighty per cent 
of the reserve of the policies, which should be enumerated in that 
list. 

Q. When was that eighty per cent of the reserve paid over to the 
company ? A. There was $2,400,000 paid over about the time the 
contract was made, and the agreement stipulated that the balance 
should be paid over to us when the list was furnished a*d reserves 
calculated. 

Q. Why was the $2,400,000 pa ? d over before the agreement was 
so consummated as to fix the amount of your liability ? A. Because 
we knew the outstanding liability would amount to at least $2,400,000. 

Q. That was the only reason ? A. They were to pay us eighty 
per cent of the reserve. 

Q. I ask you if that was the only reason ? A. They would have 
paid over, I suppose— 

Q. Can’t you answer my question? A. Certainly; I will answer 
it intelligently if you will be patient; I am proceeding to state, they 
would have paid over the eighty per cent, I suppose if we had de¬ 
manded it. 

Q. My question is a very simple one , was that the only reason ? 
A. Yes ; that was the only reason. 

Q. Now, was this list furnished on the first day of July? A. It 
was furnished about that time I think, Mr. Moak. 

Q. Was the balance of the eighty per cent of the surplus paid 
over at that time? A. Not actually paid over, no sir. 

Q. What do you mean ? A. I mean, there was on deposit in the 
department, for these different companies, $400,000 of assets; 
$100,000 for the New York State Life Insurance Company, $100,000 
for the Reserve Mutual Life Insurance Company, $100,000 for the 
Widows and Orphans’ Insurance Company, and $100,000 for the 
Guardian Mutual Life Insurance Company ; those assets could not 
really be turned over to us. 

Q. They could not be delivered to you ? A. No; they could not 
be delivered to us: they turned over to the Universal Life Insurance 
Company the stock of these different companies. 

Q. What do you mean by the stock ? A. I mean the capital stock 
of these companies. 

Q. Those deposits here represent the capital stock of the company ? 
A. Not exactly that; these deposits were placed here for the benefit 
of policyholders of the company, under the general law ; any of the 
stockholders of these companies, whoever held the stock, would be 
entitled to these deposits here after the policyholders were taken care 
of, and any company assuming the reserve and reinsuring these 
policies, the stock would be represented as an asset in the amount of 
assets on deposit at the department; if you reckon the reserve upon 
those policies as a liability, the stock would stand as an asset for that 
amount; do you understand ? 

Q. I understand you ; but suppose this $100,000 should be taken 
by other policyholders than those included in the schedule, then the 


470 


stock would not represent it ? A. It was presumed the schedule 
stated the correct list of the policyholders. 

Q. Did you verify it in any way ? A. It has been verified since. 

Q. Did you verify it at the time of this transaction ? A. It was- 
verified by their books at the time, but it was found to be incorrect 
since. 

Q. In what way? A. We have found since there are quite a large 
number of policies upon which two, or three, or four premiums had 
been paid, which by their terms were entitled to a paid-up policy 
for proportionate amounts; the practice of the company at the pres¬ 
ent time is to require the policyholder, after paying two, three or 
four premiums, to surrender his policy and demand a paid-up policy, 
within a given time, say thirty, sixty or ninety days; we found in 
the company quite a large number of policies which by their terms 
were good for paid-up policies without being surrendered; when the 
policyholders had failed to pay their premiums after three or four 
months, those policies were scratched off the books as though they 
were forfeited, and a large number have come up since. 

Q. Which was an actual liability ? A. Yes. 

Q. How many of them would that amount to ? A. As near as we 
can calculate a little over $200,000 of the reserve. 

Q. What was the liability of the company on the* reserve; what 
per cent ? A. Two hundredJthousand.dollars; 100 per cent. 

Q. The company was not obliged to issue to the policyholder a 
paid-up policy for the entire amount of the reserve? A. Ho. 

Q. You say the reserve amounted to about $200,000? A. Yes. 

Q. To what extent were they under obligation to treat them as 
paid-up policies ? A. That I could not answer; the reserve liability 
of the company, as I stated to you, was about $200,000 on the poli¬ 
cies I have stated. 

Q. How, there was some basis fixed by the company as a general 
rule, I suppose, upon which the amount of the paid-up policy was to 
be determined? A. Yes. 

Q. What was the basis ? A. It depends upon the terms of each 
policy ; for instance, there was one policy issued for $5,000, a twenty 
payment policy, to be completed in twenty years; that specified, by 
its terms, that after the payment of two or more annual premiums 
that policy should be good for a paid-up policy for two-twentieths of 
the face of it; after the payment of three premiums, three-twentieths ; 
four premiums, four-twentieths, and so on ; after having paid tw'o 
premiums that man ceased to pay ; his policy became a paid-up pol- 
icy for two-twentieths of $5,000, which would give him $500; the 
reserve of the policy we will say is $150—that liability was fixed; 
the company was required to issue no new policy; the policy existed 
as a paid-up policy for $500 just as if they had issued a new one for 
$500; the reserve was $150, and those policies that were in that 
condition represented liabilities in the way of reserve to the extent 
of about $200,000, as near as we can get at it. 

Q. As I understand you, these particular policies were prac¬ 
tically paid-up policies for $200,000 ? A. Ho, they were probably 


471 


paid-up policies for $500, or $600, or $700, or $800; the reserve 
was $200,000. 

Q. They were paid-up policies for an amount sufficient which 
would require you to put immediately on reserve, to pay them at 
the time when they became due, $200,000? A. Yes, sir. 


By Mr. Husted : 

Q. What measures were adopted to induce policyholders to change 
their policies, either in the case of the Guardian or North America ? 
A. Our instructions to our agents in regard to these matters were in 
all cases to represent to the policyholders of the different companies 
—of the two companies—their rights fairly and squarely. 

Q. As well to registered as to non-register^d ? A. As well to 
registered as non-registered; and I will say, in connection with the 
North America, that immediately after I became connected with it 
I issued a circular, which was sent to every policyholder of the 
North America, so far as I could obtain his address, in which he was 
informed that his policy in the North America was perfectly good, 
and if he was approached with the view to changing his life policy 
from the North America Life Insurance Company to the Universal 
Life Insurance Company, and representations were made to him of 
an improper character, if he would send the name of the agent to 
the company that agent would be dismissed from the employ of the 
company ; the circular stated that the only thing for them to con¬ 
sider when approached to make a change was the question of dollars 
and cents; if he could see in the change any thing to his pecuni¬ 
ary advantage, then he could make the change; if not, he should 
retain his policy in the North America Life Insurance Company ; of 
course it has been impossible for us always to control the action of 
agents. 

Q. Were agents of the company authorized or allowed to intimi¬ 
date policyholders,or use improper methods to induce them to change 
their policies? A. Never in one single instance, if we were aware 
of it. 

Q. Never in a single instance? A. No, it was never recognized 
or countenanced by the company ; on the contrary, we have on our 
letter books a large number of letters, where policyholders have 
written to the company, stating that in changing their policies or 
yielding up their policies they were deceived by the misrepresenta¬ 
tions of agents, and our reply to the policyholders has been invariably 
if you have not changed your policy, or sold your policy, under a 
true representation of the facts, or if you would prefer to have the 
old policy, send back your Universal policy and we will send back 
the North America; or, in case of a purchase, send back the money 
and we will send back the policy; wherever it has come to our 
knowledge, through letters, of agents who have resorted to a mis¬ 
representation or tried improper means to induce them to sell, we 
have censured him for the first offense, and discharged him for the 
.second. 

Q. I have been in correspondence with a gentlemen who held a 


472 


registered policy in the [North America Life Insurance Company,, 
and I have sent to him, as often as I could find any thing in the 
newspapers, any thing that has been said, legal or otherwise, with 
reference to the Universal; I was not able to get all the information 
he required, and 1 handed his letters over to the Superintendent of 
the Insurance Department, Mr. Smyth, and requested him from his 
department to furnish me the information I desired; in accordance 
with that request, McCall, the deputy, wrote me a full reply, and I 
sent it to my friend ; he wrote me the reply was very able but did 
not give him all the concrete information he desired, although in the 
abstract it was admirable; I want to ask you this question : state to 
the committee the condition of the North America as nearly as pos¬ 
sible when you became connected with it, also what disposition has 
been made of the company’s securities and assets ? A. When I 
became connected with the North America Life Insurance Company 
in October, 1874, the assets of that company, as shown by their bal¬ 
ance sheets on October 31, 1874, was $5,612,000; I will now give 
you the assets; among them were $213,000 of agents’ balances, 
$160,000 that the company had paid for commutation of commis¬ 
sions, which was not an asset; there was $102,000 of bills receivable. 

Q. Do you say agents’ balances are not an asset? A. No ; I said 
the commutation was not an asset; then there was $49,000 of sus¬ 
pense account, being items of account which they had been in the 
habit of charging up to suspense account; then there was scrip re¬ 
demption, $9,000, that was money the company had paid for the re¬ 
demption of its scrip. 

Q. Scrip on dividends ? A. No ; when the North America Life 
Insurance Company retired its capital in 1867, they issued to the 
policyholders of the company $100,000 of scrip, which drew inter¬ 
est at seven per cent, and was redeemable whenever the Legislature 
of the State of New York passed a law authorizing the company to 
redeem them ; they had bought up a certain amount of the scrip, 
and the item stated that they had paid for it $9,153,54. 

Q. Prior to the passage of the law ? A. They had bought it up 
at a discount, I suppose, anticipating the Legislature would some¬ 
time pass the law; then there were judgments $17,000 ; judgments 
against agents; Standard Life Insurance Company stock $65,000; 
that was a company that the North America had previously reinsur¬ 
ed, and the stock of the company belonged to the North America 
Life Insurance Company, and at that time was represented only by a 
mortgage of $25,000, so that there was $40,000 of the stock in excess 
of its security. 

Q. The North America had swallowed the Standard ? A. Yes. 

Q. And had taken an assignment of their stock? A. Bought 
their stock. 

Q. And that stock was supposed to be $65,000 ? A. That is what 
it stood at in the books; that is what it cost them. 

Q. It was not in fact worth that amount ? A. As I told you it 
was represented by a mortgage of $25,000 ; at that time, when I 
became connected with the company, looking over those assets, we 
selected from them $525,000 that we thought bad , and have proved 


473 


bad since, in the subsequent experience of the company, for from the 
assets considered bad we have realized only $35,000. 

Q. Ton. mean of the $525,000? A. Yes; there was $525,000 
put in to take the place of those assets; deducting this $525,000 from 
the assets as they stood, $5,612,000, it left $5,086,000; I say the 
assets as tliev stood were $5,612,000; this list of assets included the 
list of bad assets which I have spoken of which we marked off, 
$525,000, and which have all proved bad except the $35,000 ; taHe 
this from the $5,612,000 and it leaves $5,087,000 ; at that time the 
company had outstanding policies payable, which amounted to 
$147,000. 

Q. That is the liabilities you are now giving? A. No, I am just 
stating the condition of affairs; the company had policies outstanding 
payable, $147,000, beside post-dated checks and borrowed money 
which I paid; deducting that, it left $4,940,000 which the company 
had in assets ; that was what I found there, and I supposed to be 
good, at the time I went in, after paying their policiss payable; now 
during the two years and four months 1 have been connected with 
the company, we have received in premiums and interest, $1,966,000; 
the amount disbursed during that time, as appears by the books of 
the company is, in death losses, $797,000; matured-endowments, 
$497,000; annuities, $29,000; surrendered policies, $2,603,000, 
making a total of $3,930,000, which, deducted from the $6,907,000, 
the amount of asssets it was supposed to have f rom the books , and 
you have $2,976,000; I passed over to the receiver, Mr. Pierson, 
$2,734,000, which were the full assets; in other words , when the 
receiver was appointed , the full assets amounted to $2,734,000, 
which 1 paid over to him . 

Q. What is the difference between the amount of the assets and 
what you paid over? A. Two hundred and forty-two thousand 
dollars', cash, $4,700; bonds and mortgages, $1,210,000 ; fire insur¬ 
ance, $22,000. 

Q. Well, that fire insurance doesn’t represent any thing, does it; 
it is collateral? A. No, it represents that amount; it has been the 
custom of the company to pay the fire insurance on mortgage prop¬ 
erty and collect it when it collects its interest. 

Q. You increased the obligation of the mortgagors to that amount ? 
A. Certainly; that is taken from the balance sheet March 1, 1877. 

Q. Or, in other words, your mortgage contained a clause that you 
should pay the insurance and charge it to the mortgage account ? A. 
Yes, sir; it was a lien on the mortgage the same as the interest; 
then there was bills receivable, $10,000 ; real estate $891,000 cost 
price; United States stocks, $90,500; premium on them, $10,800; 
Brooklyn bonds, $27,000; furniture, $12,527, which was the same 
item in the assets at the time I went in there, with the exception 
that the item was $12,003, and it increased under my administration 
about $500; temporary loans, $8,370.76 ; suspense account, $8,700, 
part of that not marked off; premium loans, $402,000. 

Q. Then the company issued loans and took the policies as security ? 
A. No, part of the premium was paid in premium notes. 

Q. Well, then the short of it is, they are premium notes? A. No, 


474 


it is not, because they never took a premium note; it is premium 
loans. 

Q. Will you explain that? A. Yes; some companies are in the 
habit of taking an actual note in part payment of the premium for 
one-quarter or one-third, as the case may be, and these are properly 
called premium notes, because they are so; the North America never 
took a note, but the policy itself provided that there should stand as 
a loan on the policy an amount equal to one-third of the premium, 
this thirty-three and one-third per cent, so it is called premium loans 
instead of premium notes 

Q. In other words, they gave the insured credit for one-tliird of 
the aggregate premium, and when the policy became due they 
deducted that amount? A. Yes; he paid an interest on it. 

By Mr. Lang : 

Q. They lend him one-third enough to carry him? A. Yes. 

By Mr. Moak : 

Q. Well? A. Virginia bonds, $12,000; Empire Savings Bank, 
an item of $939, which was the same item in the assets when I came 
into the management. 

Q. That was the Freedman’s Bureau, wasn’t it? A. I suppose so; 
$2,500 to H. M. Morgan, which was in the statement when I took 
hold of it. 

Q. Indebtedness to the company? A. Yes, sir; premium notes 
on Standard Life Insurance Company’s policies, $2,463 ; loss on 
Standard Life Insurance Company’s stock, that is, that stock was 
marked down the time I went in there from $65,000 to $29,000, and 
there was still a shrinkage. 

Q, How much was the loss ? A. Forty thousand dollars, it had a 
mortgage of $25,000; premium loans on Government security 
policies, $1,487. 

Q. What is that ? A. Well, that is another company they 7 swallowed 
according to your way of speaking; then here is an item which 
requires explanation—Streeter’s horses, they had an agent in Wor¬ 
cester, Mass., by the name of Streeter, who failed one day, before 
my administration, to remit the amount he should ; he had invested 
it in fast horses; the company took the horses, buggies, carriages and 
so forth, and when I assumed the administration of the company I 
found Streeter’s horses, instead of being an item of income, was a 
decided item of expense ; they were eating their heads olf decidedly 
in Massachusetts; I sent for them, and brought them on to New 
York, and they have been eating my head off ever since; two of the 
horses I have sold, the other horse I have got; he is a vicious beast, 
and I am anxious to turn him over to the receiver, but the receiver 
won’t have him turned over; he has profited by a little experience I 
had shortly after I got them and tried to drive two of them; that 
item was $2,573.; J. S. Morgan & Co., $682.81 ; agent’s balances, 
$9,163.05, making a total of $2,734,000; I wish it distinctly 
understood here that I am giving approximate figures, and 
am not giving the exact amount; the expenses of management 


475 


during this time were $313,000, which was about fifteen per cent 
upon the assets of the company during my administration. 

Q. Well, now you have got this thing that bothers brother Lang; 
there is $230,000 that you have not turned over; what has become 
of that ? A. That has gone for expenses. 

Q. You say you had in hand as assets $2,976,000? A. Yes; 
that was the balance before there had been any expense of conduct¬ 
ing the business. 

Q. You had that amount of assets less the expenses ? A. Yes, 
less the expenses; that is, you will find the balance in that way. 

Q. How much were the actual expenses? A. It is $301,000; the 
difference between $242,000 and the $301,000 was $59,000, which 
is the amount we have realized out of those items of assets which 
were considered bad; I said $35,000 first, but I find it was $59,000. 

Q. You rescued $59,000 out of the rubbish ? A. Yes; I will state 
to the committee, that I was away when the subpoena was served on 
me, or rather left at my office ; I was in Hartford ; I was telegraphed 
the fact that it had been left at the office; I came immediately to 
the Hew York office, on Monday night, and made this statement, 
and it is substantially correct; of course I don’t swear it is correct 
to a dollar. The amount I found there and the amount I turned 
over t) the receiver is substantially correct; I will say still further, 
and I think it is just to the present administration of the company, 
that I should state, although perhaps it is going out of my way a 
little, now strictly in answer to the question, but I hope I may be 
pardoned for making the statement; when I became connected with 
the North America Life Insurance Company, and when I had been 
in my position as president of the company less than two months, a 
decision was rendered in General Term at Poughkeepsie, in the case 
of the Guardian Life Insurance Company against Kashaw, for fore¬ 
closure of a mortgage, in which the defense was made that it was a 
mortgage made to the Reserve Mutual and transferred by them to 
the Guardian, and the defense was set up of usury, on the ground 
that Kashaw had paid to the agent a commission for making the 
loan ; it was not whether the money went into the Reserve Mutual 
Life Insurance Company, but the officer himself had the benefit of 
it; the General Term held that the payment of money to an officer 
of the company for procuring a loan, although the money may not 
have gone into the company, but has been appropriated for his per¬ 
sonal use, still it renders the loan usurious; that case was reversed 
in the Court of Appeals, but not upon that ground; it was reversed 
upon the question of fact whether any thing was paid to the officer 
or not; that did not touch the law, so the General Term decision 
stands to-day as the law for all purposes. 

By Mr. Lang : 

Q. Who was the agent ? A. He was the vice-president of the 
company. When I went into the North America Life Insurance 
Company, this decision was made about two months after I went in 
as president of the North America Life Insurance Company, of this 




\ m 

$4,940,000 of assets that was supposed to be good—-$2,000,000 and 
over—between $2,000,000 and $2,500,000 of these assets or securi¬ 
ties were in precisely the same condition as that Kashaw mortgage; 
they had been loaned to a party in New York on builder’s loans; I 
ha<i every reason to suppose that bonus had been paid to an officer 
'of the company for making the loan; they were builders’ loans— 
loans made upon property—mid money advanced as the houses were 
built; after four months of incessant labor and a great deal of mental 
anxiety I succeeded in saving those assets to the North America 
Life Insurance Company intact, and without the cost of a single 
dollar to the company. 

Q. To what company ? A. To the North America Life Insur¬ 
ance Company; I succeeded in taking off the stain of usury and 
turned them into the North America Life Insurance Company intact, 
[By direction of the committee the stenographer was instructed to 
cease taking notes while the witness explained how that w^as accom¬ 
plished.] 

Q. The short of it is, that when you went into the company you 
found about $2,000,000 given to the company by a man named 
McCool, that were claimed to be usurious, on account of bonuses 
which were paid to the former president of the company ? A. 
Yes. 


Q. And that during your administration it was purged of the 
taint of usury according to your information and understanding, 
and as you were informed and understood from counsel ? A. 
Yes. 


By Mr. Moak : 

Q. Then, as a matter of fact, there may be a clause in the policies 
which will create a liability far beyond what would seemingly exist 
so far as the books of the company at the office are concerned ? A. 
No, that is not a fair construction of it. 

Q. The books of the company did not show that there were paid-up 
policies of this amount in existence, did they? A. No; there may 
be policies in existence in the company which the books would show 
to have been erroneously crossed off as forfeited; for instance, take 
a policy in this very case; here was a policy for $5,000, issued to a 
man on a ten-payment plan ; that policy, by its terms, we suppose 
to be good. 

Q. What I want to show is, that so far as any thing on the books 
of the company is concerned, or in the office of the company, there 
was nothing to show that this $200,000 liability existed ? A. The 
policy appeared on the books of the company to have been canceled, 
or it was crossed off as forfeited. 

Q. It did not appear that they had that class of policies in the 
company ? A. N o. 

Q. And there was nothing to show that they existed as a liability ? 
A. No. 

Q. And there was nothing in the office of the company, to a man 
who had not been posted in regard to the fact, which would enable 


477 


him to discover that this clause was in the policy? A. No, he would 
not know they were in existence. 

Q. As a practical insurance man, one of the committee desires me 
to ask you a question, and I will do so ; to illustrate it, I will say, if 
the Superintendent of the Insurance Department went down to ex¬ 
amine the company, is there any way by which he could discover 
that liability ? A. No. 

Q. There is nothing in the books which would enable him to dis¬ 
cover that this clause existed in the policy ? A. No, probably not. 

Q. Nov in the office of the company % A. No. 

Q. So, so far as the examination of the company was concerned, 
no examination by the Superintendent of the Insurance Depart¬ 
ment, unless the truth was stated to him, would enable him to know 
what the state of the company was, so far as these policies were con 
cernect ? A. No, not unless he applied to each policyholder for 
information. 

Q. Well, suppose you wanted to remedy that, as a practical man, 
how would you do it ? A. How would I remedy it; why, it is 
very easy. 

Q. As a practical insurance man, how would you remedy it, so 
that the Superintendent of the Insurance Department, when he went 
down there to make an examination, could discover it ? A. I should 
require every company to keep an exact copy of every kind of policy 
they issued, stating in writing upon the blank that the company 
commenced to issue such and such a policy, giving its particular 
form, on a certain day, and that they ceased using this form on a 
certain day ; or that they commenced the issue of this form of policy, 
with policy number so and so, and ceased with policy number so 
and so ; then by turning to the form of policy, you would have it at 
all times before you what kind of policy it was. 

Q. You would require it to be entered on the books that policy 
number so ard so was of such a form? A. Yes, you might keep a 
file of the forms, and say it was form number so and so ; either of 
them would correct it. 

Q. Then it was a fact that, so far as the liability of the company 
was concerned, there was no means that you know of by which the 
extent of the liabilities could be obtained at the office of the com¬ 
pany from the books or the records kept? A. On these policies , no; 
as I was saying, the transfer of these policies was from one com¬ 
pany to another, and it is just possible one of the companies had a 
list stating that they issued’these particular forms ; perhaps they did 
not keep a copy of those forms, but if they did we have not found 
them. 

Q. Well, was there nothing on the books of the Guardian to show' 
they w r ere in existence ? A. Not that I am aware of. 

Q. Had there ever been to your knowdedge, or so far as you ascer¬ 
tained when you came in and commenced your connection w T ith the 
Guardian, any examination of the affairs of the Guardian ? A. By 
the superintendent, do you mean ? 

Q. Yes ? A. The superintendent, or the employes from the 
office of the Superintendent of the Insurance Department, had 


478 


spent some considerable time in the office of the Guardian, I under¬ 
stand, the previous summer in checking over their policy register 
and comparing them with the department register, to see that they 
corresponded; and he had devoted some considerable time to 
another matter, which was this, that when the Guardian reinsured 
in the Reserve Mutual Life Insurance Company, it had transferred 
from the Reserve Mutual Life Insurance Company and the Widows 
and Orphans’ Life Insurance Company to the Guardian a large 
number of policies, not by taking up the original policies and issu¬ 
ing Guardian policies for them, but by issuing the Guardian renewal 
receipt, in which it recited that the Guardian Mutual Life Insur¬ 
ance Company assumed the liability under the original policy. 

Q. Was there any thing in the books of the company to show to 
what extent that had been done? A. Yes, because in the Guardian 
books there was the number, and it referred to the number of the 
original policies. Now, in entering that policy upon the books of 
the Guardian Mutual Life Insurance Company, they entered it as a 
new policy of the new date of the then date of issue, while really 
the original contract was outstanding. 

Q. Then there was apparently a liability to both companies ? A. 
No; because the receipt showed it was issued in lieu of, or for pol¬ 
icy number so and so, in the Widows and Orphans 1 , or the Reserve 
Mutual ; the books showed it was not a double liability, but the 
discrepancy was this : here was a policy for $5,000, issued five years 
ago, by the Widows and Orphans’ Life Insurance Company, for 
which the Guardian gives, to-day, the receipt, to renew it for another 
year, and it is entered as a new policy, and that appears on the books 
as if a new policy was issued by the Guardian while the original 
policy was outstanding, and the reserve of the old policy was the 
proper amount to charge up against the policy instead of the reserve 
on the new policy, as it appeared in the Guardian ; the department 
spent some time in correcting these datas. 

Q. Had the Guardian been paid on the reinsurance for the reserve 
on the old policy, or the reserve on the new policy ? A. Why, yes; 
it had been paid, the reserve on the outstanding liability, and I want 
you to know all about that. 

Q. In other words, the apparent liability of the Guardian was the 
reserve upon a new policy, while the real liability was the reserve 
on the old policy which had been running for years ? A. Yes ; for 
two or three, or four years. 

Q. Then, so far as an examination of the books of the Guardian 
was concerned, it would not disclose the actual condition of the 
Guardian unless you went back ? A. Yes; but a fellow who knows 
any thing about an examination would go back mighty quick. 

Q. Well, he might after he got the kink ? A. Well, he would get 
the kink most almighty quick. 

Q. That would make a great difference in the liability of the 
Guardian, would it not ? A. Yes ; but those policies were corrected 
during the summer. 

Q. Well, but how about the reserve of the Guardian, was it the 
reserve of the new policy, or had it the reserve on the old policies ? 


479 


A. At the time we went in they had mostly the reserve on the old 
policies; the datas were substantially corrected before. 

Q. You say this mistake in regard to the liability of the policy 
which contained the paid-up clause, as we would term it, a,fter two 
payments, may have occurred— A. Wait a moment; they did not 
contain a clause for a paid-up policy; but the policy itself was good 
as a paid up policy. 

Q. Well, T can’t see the distinction ? A. Why, it contained a 
clause which provided that it should operate as a paid-up policy. 

Q. It contained a clause that it should be in itself a paid-up pol¬ 
icy? A. Yes. 

Q. That mistake, you. say, might have occurred in consequence of 
the transfer from one company to the other; or, in other words, 
what you mean to say is this, that the fact of the existence of that 
liability might have been shown on the books of some of the old 
companies ? A. The policy stated in it the liability of the old com¬ 
pany, and I don't see that the transfer would account for its not 
appearing on the books somewhere. 

Q. You say that ^the State Superintendent had gone down there 
to examine the company, and if he had gone back to the books of 
the old companies , lie might have found there a statement that these 
policies were of this character; now you state that there was nothing 
by which he would know or that would show this thing ? A. Oh, 
they may have kept their form of policies which I had never seen ; 
in the North America Life Insurance Company there is a perfect 
copy of the form of every policy issued by them. 

Q. And the other companies may have had the same thing, may 
they not ? A. Oh, they may have had them. 

Q. But they were not handed over to you if they had ? A. There 
were none of the books of the Guardian ever handed over to us; 
we never had their books; the Guardian Mutual Life Insurance 
Company has always managed its own business and kept its own 
books and accounts, as independent of us as the Mutual Life. 

Q. Did you not become a director? A. Yes, but it still main¬ 
tained its organization and collects its premiums. 

Q. How many stockholders of the Universal became directors of 
the Guardian after the arrangement was made that you have spoken 
of ? A. That I can’t tell you ; I think five or six. 

Q. What was the number of directors of the Guardian, or in other 
words, did you get a majority of the directors ? A. I think the 
number is about fifteen; I don’t think there was a majority of the 
board of directors of the Guardian, Universal directors. 

Q. There were several members that were directors of the Guard¬ 
ian who were also directors of the Universal ? A. Yes, sir. 

Q. Enumerate those that you can remember ? A. I can’t tell 
beyond Mr. Bewley, the secretary, Mr. Montague, the actuary, and 
myself; we became so. 

Q. You were elected directors after the arrangement was made! 
A. After or about the time; I don’t remember the time exactly. 


480 


Q. Was it not a fact, that a majority of the directors in the Guar¬ 
dian were persons who were in the interest of the Universal ? A. 
Moso assuredly they were after the transfer. 

Q. At the time when the Guardian went up into the hands of a 
receiver, you turned over how much assets? A. I told you I did not 
remember; I said, I think, abou^ a million of dollars; I had not 
time sufficient to enable me to make up a statement. 

Q. What was the character of those assets you turned over to the 
receiver? A. Bonds and mortgages, government bonds, etc. 

Q. How much in government bonds ? A. One hundred thousand 
dollars. 

Q. How much in bonds and mortgages? .A. Four hundred thou¬ 
sand dollars, I think; we did not turn them over; they me on deposit 
here. 

Q. In other words, they are on file here, and vested in the receiver 
as you understand it ? A. That is a question of law that I am not 
prepared to answer. 

Q. What else ; you say there was this $100,000 in government 
bonds that were in the possession of the department ? A. Yes. 

Q. And $400,000 in mortgages ? A. I think they were there ; 
about that. 

Q, What else did you turn over ? A. There was $200,000 or 
$300,000 in premium notes, I don’t recollect exactly which ; 1 remem¬ 
ber those things were there ; then there is a claim of some $65,000 
against the Atlantic Bank. 

Q. Was that good for any thing?* A. I think so ; it was claimed 
it was a loan to the bank, and the bank claims it was a loan to 
Taintor; a jury has to decide that question. 

Q. And that was in controversy, whether the loan was to the bank 
or to Taintor? A. Yes; then there was the interest on deferred 
premiums and the real estate. 

Q. How much real estate ? A. I can’t tell you. 

Q. Did the company own a home office ? A. Ho. 

Q. Hever did ? A. Hever did. 

Q. It was real estate, then, purchased on mortgage foreclosure ? 
A. Yes. 

Q. And the company acquired title to it? A. Yes. 

Q. Was there, after this arrangement was made, registered policies 
issued by the Guardian ? A. Ho, sir. 

Q. Ho registered policies secured by deposits here as such ? A. 
Ho; the Reserve Mutual had, I think, issued a few registered pol¬ 
icies, but those had all been retired. 

Q. Before you came in ? A. I think there were two or three out¬ 
standing when I came into possession of it. 

Q. The surrender of those were subsequently obtained ? A. 
Yes. 

Q. When the surrender was obtained, was the security surrendered 
to you or the Universal? A. To the Guardian ;* it was surrendered 
to the Reserve Mutual. 

Q. Practically it came back into your company, did it not ? A. 
Yes. 


481 


Q. What was the $500,000 deposited in the department for ? A. 
One hundred thousand dollars was required for each company ; there 
was $400,000 altogether, I think ; $100,000 being required for each 
of the companies. 

Q. Well, give the names of them, won’t you ? A. One hundred 
thousand dollars for the New York State Life, $ 100,000 for the 
Reserve Mutual, $100, 00 () for the Widows and Orphans, and $ 100,000 
for the Guardian. 

Q. It was $400,000, then, in bonds and mortgages? A. Three 
hundred thousand dollars, I think, in mortgages, and $ 100,000 in 


government bonds 

Q 

seem 


Then what was the additional $100,000 for ? A. Why, the 
rities I turned over; I don’t think it amounts to quite that, but 
it is somewhere in that neighborhood; then there was some $40,000 
in Virginia bonds; or I guess there was more than that; I guess 
there was $60,000 in Virginia bonds; those were on deposit in Vir¬ 


ginia. 


Q. I think I did ask you, but I will ask you again, did you per¬ 
sonally. or any member of your family, or any person connected 
with you, derive any pecuniary benefit from this transaction ? A. 
From the Guardian Mutual, I suppose you mean. 

Q. Yes? A. Well, that will involve another subject which I sup¬ 
pose you will ask me about at som3 time in the future , so I may as 
well answer it now right here; when I became connected with the 
Universal Life Insurance Company, in 1865, as I explained to you 
the other day, the first of November, 1865, I made an arrangement 
with that company by which I assumed the control and management 
of the agencies of that company ; I was made the vice-president of 
the company for the purpose of giving me the necessary authority; 
at that time the contract was made with me, in the usual form of 
the general agent’s contract, by which I was to receive a salary 
of $2,500 4 year, and a commission of two and a half per cent on 
the premium receipts. 

Q. All the premium receipts of the company ? A. All the pre¬ 
mium receipts of the company; at the time the Universal Life 
Insurance Company had less than $40,000 of premiums on its votes; 
it had no agents, and I took it; that contract was to continue for 
ten years; I worked under that contract until the first of May, 
1867, when it was surrendered and a new contract made, by which I 
received a salary of $5,000 a year and two and a half per cent upon 
the net receipts of the company, being the receipts less the expenses, 
and out of that I was to pay my own traveling expenses, and to pay 
any small sums which I saw fit to advance the agents to encourage 
and aid and assist them, over and above the regular commission the 
company authorized me to give; that contract ran from the first^ of 
May, 1867, to the first day of May, 1876, and terminated the first 
• day of May a year ago. 

Q. That contract was in existence at the time when this arrange¬ 
ment was made ? A. Exactly; under that contract I have received 
all the money that I have received in any way, shape or manner, 
directly or indirectly, from the date of its commencement down to 


482 


tlie date of its termination, except the salary I have received from 
the North America Life Insurance Company ; that is all I have 
received of any New York company, except the Charter Oak; I did 
benefit by that arrangement, because it increased the business of the 
Universal Life Insurance Company. 

Q. You got two and a half per cent on the premiums which came 


m; A. That is it. 


Q. About how much were the premiums per annum ? A. That I 
can’t answer you ; it will take a long time to divide the business, 
because it went into the business of tlie company , but I can give 
you the total result of the contract; under that contract, from the 
1st day of November, 1865, down to the first day of May, 1876, 
under the two contracts—I should say and down to the first day of 
April, 1877, for since the 1st day of May a year ago I have received 
a salary from the Universal—my entire receipts from all life insur¬ 
ance companies in the city or State of New York for eleven years 
and five months were $205,500. 

Q. Was that all you received from any source, either as salary or 
otherwise? A. All I received from any source, except $10,500 I 
received as salary from the Charter Oak; that is my receipts, less my 
traveling expenses and what I allowed agents. 

Q. How much were the receipts, including every thing ? A. That 
1 have not got; I had my bookkeeper make up the amount from the 
books and net receipts; that is the net amount I have received in 
any way, shape or manner. 

Q. Either as profits on contracts or salary or commission ? A. 
Yes, either as profits upon contracts, commissions, salaries, or in any 
way, shape or manner. 

Q. In that do you include the arrangement with the North 
America ? A. I include every dollar I have received from the North 
America, the Guardian and the Universal business in any way, 
shape or manner ; every dollar of profit I have received from any 
life insurance business in the State of New York is included, and 
that is for eleven years and five months, which is less than $18,000 
a year. 

Q. Was there a company in New York called the North America? 
A. Oh, yes. 

Q. How many companies had that swallowed before it got to be 
the North America, or when you made the arrangement with it? 
A. It had reinsured the Government Security and the Standard 
Life. 

Q. In the first place North America was organized about when ? 
A. In 1862. 

Q. And when was the Government Security organized ? A. That 
I don’t remember; some where along 1866, 1867, 1868, or some 
where along there. 

Q. The Government Security Company ran for a certain length 
of time? A. Yes. 


483 


Q. And up to about what time, before the North America swal 
lowed it ? A. I think the North America reinsured the Govern¬ 
ment Security in 1873, along there some where; that is my im¬ 
pression. 

Q. When did the North America take in the Standard ? A. That 
I cannot tell you. 

Q. About when, before or after ? A. I think it was before the 
Government Security. 

Q. Was the Standard Life a capital company or mutual company ? 
A. It was a mutual company and had a capital stock. 

Q. It is what you call a mixed company, is it not ? A. It is what 
we call a stock mutual; it had a capital, and did business on the 
mutual plan, like the Equitable. 

Q. How much capital did it have ? A. My impression is the 
capital stock of the company was $120,000; it may have been 
$100,000. 

Q. What was the capital of the Government Security? A. That 
was mixed the same; all the companies organized since 1853 must 
of necessity be companies with a capital stock; they have been or¬ 
ganized since then. 

Q. The first company which the North America reinsured was the 
Standard, you say ? A. Yes, I think that was reinsured the first. 

Q. What were the terms by which they reinsured the Standard? 
A. That I don’t know ; What I am going to say is this, that that 
business was practic lly closed out before I had any thing to do with 
the North America ; I don’t think there were more than three or 
policies in existence of the Standard. 

Q. What policies had been issued, the Government Security or 
the North America ? A. Now, by the way, it is my impression the 
Standard was reinsured in the Government Security. 

Q. And then the North America reinsured the Government 
Security and Standard both? A. Yes. 

Q. Which policies had been issued, the North America or the 
Government Security ? A. The North America, I think. 

Q. You think there were not to exceed three or four of the poli¬ 
cies of the Government Security in existence ? A. I think so; there 
were very few. 

Q. What had become of the original capital of the Standard 
Life; who owned it ? A. When I went in there, in the North 
America Life, it was in their statement which I have referred to this 
morning. 

Q. What were the terms on which the North America reinsured 
the Government Security? A. Well, I never read the contract be¬ 
tween them. 

Q. Give it as you understood it ? A. My understanding of it 
was that the North America Life Insurance Company assumed the 
obligations of the Government Security Life Insurance Company, 
and the Government Security Life Insurance Company turned over 
an amount equal to the reserve on its outstanding policies. 

Q. How much did the Government Security in that transaction 



31 


484 


reserve ; I am not speaking of the legal insurance reserve? A. How 
much was there left ? 

Q. Yes? A. The Government Security, I believe, paid back to 
its stockholders about eighty per cent of the amount paid in. 

Q. Then they paid back to their stockholders eighty per cent and 
turned over the reserve to the North America ? A. Tes, but they 
did not do that until all the policies in existence were taken up ; 
there were live or six of the Government Security policies in exist¬ 
ence, representing $2,000 ; I think that was the face of them; there 
is deposited here at Albany $9,000 to meet them ; that was a regis¬ 
tered company, and it had first to keep on deposit an amount equal 
to the face of its policies, and under the registry law an amount twice 
the face of its policy obligations, so that that would make three times 
the face of its policy obligations that it has here now. 

Q. Do you mean three times the amount of the face of the insur¬ 
ance? A. Under the general insurance law a company, when it 
reduces its outstanding policies down below $100,000, which is the 
amount it must keep here, it can draw down the security, leaving an 
amount equal to the full face of its policies. 

Q. Then it was only when it got below that standard that it could 
do that? A. Yes, in the general deposit it could draw the amount 
down, leaving on deposit an amount equal to the face of its policies, 
supposing it has originally $100,000 on deposit. 

Q. Then it could issue policies up to $100,000, I suppose ? A. I 
am speaking of a company winding up; when it had reduced its pol¬ 
icies below $100,000, the face of them, suppose it reduced them to 
$50,000, it could draw down $50,000, leaving always the face of them 
on deposit. Under the special registry law, a company, in winding 
up, must keep on deposit an amount equal to twice the amount of 
the policies ; that is, it cannot draw down below an amount equal to 
twice the face, when it gets below a certain fund; now it has got 
there, twice the face of the policies under the requirements of the 
registry law, and once the face of the policies under the general law, 
so that it has three times the face of the policies on deposit. 

Q. What was the condition of and how many policies had the 
Security out when you went into the North America? A. It had a 
reserve on outstanding policies of say about $50,000 or $60,000, as I 
remember. 

Q. That was all the Security had? A. Yes. 

Q. By the face of the policies? A. No ; not by the face of the 
policies; it was secured by the deposit here of an amount equal to 
the reserve of the outstanding policies under the registry law, and 
secured by the deposit of an amount equal to the face—yes, I think 
they had $100,000 deposited under the general law. 

Q. That was the condition of the Government Security ? A. Yes. 

Q. When you went into the North America, including the policies 
of the Government Security and Standard Life, what was about the 
face of the entire insurance by the North America? A. About thirtv 
million dollars. 

Q. About what was its reserve? A. About 6,000,000 of dollars in 


485 


mortgages and governments; that is its reserve and liabilities for 
unpaid death claims. 

Q. The reserve of outstanding policies was how much? A. I 
should say about $5,800,000. 

Q,. About how many policies had it in force in number ? A. About 
13,000, I think. 

Q. When was the arrangement between the Universal and North 
America made? A. There never was any arrangement made; 
never was any contract of any kind, or arrangement, except my 
attention was called to the condition of the company along in Sep¬ 
tember, 1875 ; Mr Morgan at that time— 

Q. Who were its officers? A. Mr. N. D. Morgan, was the 
president; his son-in-law was the vice-president; another son was 
. secretary, and another son the actuary. He stated to me that he was 
getting along in years and broken in health; that his company was 
in trouble, and that if any one would come into that company and 
put into the company, in place of those assets I spoke to you about, 
agents’ balances and commuted commissions, an amount sufficient to 
make the company good and replace things, he would be willing to * 
retire from the management of the company; well, I looked the 
company over, and concluded to do that—put in that money, they 
making with me a similar contract to the one I explained to you 
yesterday that I made with the Guardian. 

Q. It was the same in all essential particulars ? A. Yes; essen¬ 
tially the same in every particular. 

Q You stood in the same position to the North America that the 
Universal and yourself combined did to the Guardian? A. No; 
because there was never any arrangement with the North America 
by the Universal in any way, shape or manner. 

Q. You assumed to take care of it, did you not? A. I stood to 
the North America in the same position I stood to the Universal in 
regard to the contract 

Q. You made to the North America substantially the same con¬ 
tract which you yourself made in regard to the Guardian? A. I 
never made a contract with the Guardian, it was directly with the 
Universal. 

Q. Well, it was substantially the same contract which you made 
with the Universal, then? A. A contract was made with the North 
America Life Insurance Company which recited that, whereas, on an 
examination into th§ affairs and the condition of the company, it 
appeared there was a deficiency of $525,000, or it required $525,000 
to take the place of certain assets of little value; and whereas that 
amount had been contributed by me, that I was to receive a commis¬ 
sion, I think it was, of twenty per cent upon the premium receipts, 
and some forty per cent of the profits resulting from forfeitures and 
purchases, or in other words the saving of the reserve, which should 
not be paid until that $525,000 was paid back, with the interest, 
then the contract was to cease. 

Q. You paid how much in that case? A. Five hundred and twen¬ 
ty-five thousand. 

Q. In what way ? A. In checks that were certified. 



486 


Q. All of it in certified checks ? A. Yes. 

Q. Upon what bank? A. The Exchange National Bank. 

Q. In your own checks ? A. My own checks. 

Q. In order to present the same question I did in the other case, 1 
will ask you from what source did you receive it ? 

Mr. Cowdin—A s chairman, I would say that question you need 
not answer. 

Mr. Weiant —He has not declined to answer it, has he\ A. I will 
say that the money came from no life insurance company, in any 
way, shape or manner, and did not come from any officer of any life 
insurance company; neither did any officer of any other life insur¬ 
ance company in any way, shape or manner, contribute to that fund \ 
I did not state that before. 

The Chairman —We are desirous of giving all the time and lati¬ 
tude necessary to investigate matters pertaining to life insurance, but 
the committee have got weary of going over the same evidence again 
and again. There are two or three witnesses yet to be examined 
and while it is not my wish to interrupt the witness or stop him in 
stating any thing he knows, we don’t want to go over the same 
ground again. 

Mr. Weiant —You must necessarily go over the same subject in 
calling each witness, in order to get their ideas and views. If Mr. 
Furber says that it is a matter that concerns his own individual affairs,, 
and he don’t wish to answer it, that will settle it. 

Witness —I will say that it is a perfectly private matter, a purely 
private matter. The question was asked me yesterday whether the 
money was obtained from any other insurance company. I say, in 
answer to this question, that this money was not obtained from any 
insurance company, nor from any officer of an insurance company in 
any way, shape or manner, and was purely a private matter of my 
own. 

Mr. Moak — As I understand it, the chairman rules, and hi that 
I acquiesced, that that question need not be answered. 

Mr. Coulter — lie says, if I understand him that this has nothing 
at all to do icith the insurance company. 

Mr. Moak —That does not dispose of the question, and I want to 
know if it is ruled the question shall not be answered ? 

Mr. Weiant —Well, who makes the objection to it? 

Mr. Vanderpoel —Mr. Furber refuses to answer it, because it is 
a matter that affects his own business transactions. 


4S7 


The Chairman —We decided the same question yesterday, that he 
is not obliged to answer it. 

Q. Well, I will put the other question now that I did yesterday, 
in regard to this matter; how long you had the money which was 
put up in that case ? A. I decline to answer for the same reasons. 

The C iiairman—T hat is substantially the same question. 

Q. I asked you yesterday in reference to one matter and I will 
.ask you the same question in regard to this; how soon after you put 
up a certified check in the case of the Guardian was the money drawn 
•out ? A. It was repaid to me under the contract. 

Q. How soon after the certified check was given, at the consum¬ 
mation of the arrangement made with the Guardian, was it drawn 
out of the bank ? A. That I can’t tell you. 

Q. About how soon ? A. I can’t tell you that; it was deposited 
to the credit of the company. 

Q. Was it all deposited to the credit of the company? A. Yes, sir. 

Q. How soon ? A. Bight away. 

Q. Was any of it drawn out by the company ? A. Yes, all of it 
was drawn out by the company. 

Q. How soon ? A. I can’t tell you. 

Q. You can tell about how soon ? A. It went into the regular 
-cash account of the company. 

Q. About how soon after this arrangement was it that the check 
was paid by the bank? Eight immediately afterwaids; within a 
few days. 

Q. It went to the credit of what company ? A. It went to the 
credit of the Universal Life Insurance Company; that check was 
part of the assets turned over to the Universal Life Insurance Com¬ 
pany in payment of the reserve. 

Q. Then the bank credited the Universal Life Insurance Company 
with the amount of that check? A. Yes. 

Q. And your control over that fund ceased ? A. Entirely. 

By Mr. Wei ant: 

Q. Do you remember how the check was drawn ? A, The Guar¬ 
dian check was payable to the order of the Guardian Life Insurance 
Company ; it was indorsed payable to the order of the Universal Life 
Insurance Company. 

Q. Did it bear the indorsement of the Universal? A. Yes, sir, 
.and was deposited by them. 

Q. Did it bear any other indorsement ? A. Ho, sir. 

Q. Is that check in existence ? A. Yes, sir, I presume so. 

By Mr. Moak : 

Q. How soon after the arrangement was made with the Horth 
America was the check you gave in consummation of that contract 
paid ? A. Oh, I suppose a few days, directly after. 


488 


Q. To whose order was it made payable? A. To the North 
America Life Insurance Company. 

Q. By whom was it indorsed ? A. By the North America Life 
Insurance Company. 

Q. Who were its officers ? A. I was the president; let me say one 
word right here in regard to that matter; that amount was made, I 
think, in two checks; $400,000 were payable to the order of the North 
America Life Insur^pce Company, and $125,000 to the order of Helen 
M. Morgan, wife of N. D. Morgan ; when I was examining into the 
affairs of the North America Life Insurance Company, I found exist¬ 
ing there a contract made with Mrs. Llelen M. Morgan, wife of N. 
L>. Morgan, under which, some two years before, she had conveyed 
to the North America Life Insurance Company certain real estate in 
Brooklyn ; there was some question about the company doing busi¬ 
ness in Massachusetts, and she conveyed that real estate to the com¬ 
pany, and took back a contract by which she received a commission 
of five per cent, I think it was, upon certain premiums of the com¬ 
pany, that contract had paid about $85,000 to $40,000 a year, and 
the only way of getting rid of that contract—because she had her 
right to withdraw from that contract when she pleased, and to hold 
on to it as long as she pleased, and on withdrawing from it she had 
the right to demand of the company, upon its surrender, a reconvey¬ 
ance of the real estate—was to buy that contract right out, and the 
price paid for it w T as $125,000. 

By Mr. Weiant : 

Q. Who did she make that contract with ? A. With her husband. 

Q. And he was the president ? A. Yes, sir ; I would have nothing 
to do with the company wdiile that contract was in existence. 

Q. Did you think that was a valid contract? A. I did not propose 
to pass upon it, because it was not necessary ; I was not willing to 
go into the coilipany with the contract existing, and I said to Mrs. 
Morgan or to Mr. Morgan, I forget which, that this contract must 
be got out of the way—I will give you for that contract $255,000, 
or 1 will give it to your w T ife, provided she will take $125,000 of 
that amount and pay it to the North America Life Insurance Com¬ 
pany, and take a reconveyance of the real estate hack. 

Q. You were speaking for yourself then? A. Yes ; that convey¬ 
ance represented a liability to the company of $125,000. 

Q. Was that its value ? A. No. 

Q. What was the fair value of that real estate ? A. Not over 
$60,000 or $70,000; but $125,000 was paid to her to take the place 
of the real estate. 

Q. She was to take the $255,000 for her contract ? A. Yes, sir. 

Q. Of that she was to take $125,000 and buy back this land'l A. 
Yes. 

Q. Well, what was the balance of the money for ? A. To enable 
her to take this loan that stood on the books and give the money to 
the company; it was an individual loan that was made by Morgan ; 
nothing to do with me and in advance of my going in. 


489 


Q. There was nothing to compel yon to give the company the 
benefit of it after yon purchased it? A. I did not purchase it. 

Q. What was to become of the other $100,000 ? A. There was 
$125,000 that she was to have, to replace in the company's assets 
certain loans that I did not like; for instance, there was $20,000 
to the Kennard & Hay Printing Company, and that was rather a 
family affair, and other things of that kind ; and I said to Mr. Mor¬ 
gan—these things amounted to about $100,000—1 said a $100,000 
more of this must go back into the company, and take the place of 
those claims. 

Q. Y ou mean that she must buy them ? A. That she must buy 
them, or take them up and put money in their place; 'the other 
$25,000 was paid her really as a commutation of the contract, 
which was, perhaps, six or eight months’ income on it. 

Q. How long had that contract been in existence ? A A little 
over two years. 

Q. During that time she had been receiving an income from the 
contract of how much ? A. I should think she received some 
$80,000 or $90,000. 

Q. Independent of what she got finally ? A. Exactly. 

Q. How much was the value of the real estate when it was orig¬ 
inally conveyed? A. It was conveyed in 1S61 or 1862; it was the 
year after the panic. 

Q. How much was it worth then ? A. 1 do not think it was 
worth $75,000 at the outside. 

Q. Did you ascertain from what source she got it? A. It belonged 
to her for some considerable time. 

Q. Before she was married, or did she get it from her husband ? 
A. From her husband, I suppose ; it is one of those things I never 
inquired into. 

Q. You gave the $400,000 check, payable to the order of the 
company? A. Yes, that $400,000 went into the company in place 
of those items, such as commuted commissions, agents’ balances, 
and such things; the other $125,000 went to take the place of the 
real estate. 

Q. How did she get the other $100,000; from what source did 
she get that ? A. From my pocket, and I never got a dollar of it 
back. . # 

Q. Do you mean to say you loaned her $100,000 ? A. No, sir, I 
did not loan her a dime; I gave her that money for that contract; 
you know this contract was made with me for the return of the 
money, or for the return of only $525,000 ; $400,000 of it went to 
take the place of those items of assets not good; $125,000 went to 
take the place of the real estate ; the other $125,000, although $95,000 
to $100,000 came back to take the place of those things that Mor¬ 
gan really owed, I did not think the North America Life Insurance 
Company should pay that back to me under this contract, because 
they were bound to pay it; that is money I have paid, and it is 
gone. 

Q. Do you hold no security for it ? A. No, not one dollar. 

Q. In regard to these securities, amounting to $100,000, were 




490 

they transferred to her, or did the title remain in the company ? A. 
Well, I don’t know; 1 think they were just simply loans of money, 
paid out without any security ; the Kennard & Hay Company owed 
about $20,000, which was paid out of the $95,000. 

By Mr. Weiant : 

Q. Who paid it ? A. I paid it. 

Q. Did you take it out ? A. No. 

Q. How did you pay it ? A. There was a check for $400,000 
made payable to the order of the North America Life Insurance 
Company, to take the place of the items of commuted commissions, 
agents’ balances, ete., which were bad assets; there was $125,000 
made payable to the order of Mrs. Helen M. Morgan; she indorsed 
it over to the North America Mutual Life Insurance Company, and 
they deed back to her the real estate ; that made -$525,000 ; I think 
the deed was executed, but I don’t think it was ever recorded ; I 
saw it in Mr. Morgan’s possession, but I don’t know whether he de¬ 
livered it; there was $400,000 which went into the North America 
Life Insurance to take the place, as I said before, of these agents’ 
balances and commuted commissions. 

Q. But let us get back to the deed—you say it was delivered ? A. 
I cannot swear that the deed was ever delivered ; I saw it in Mr. 
Morgan’s possession; that is the deed of Mrs. Morgan to the 
company. 

Q. That vras before you became president ? A. Oh, yes, it was 
long before my administration. 

Q Well, you saw the deed? A. Yes, I saw it. 


By Mr. Moak : 

Q. Was there any condition on the part of the company under 
any term or agreement that she should take it back ? A. This con¬ 
tract made with Mrs. Helen M. Morgan, on account of this convey¬ 
ance, stipulated that she should receive these certain commissions 
individually, and that at any time when she saw fit to surrender the 
contract she could demand back the real estate. 

Q. I can see the question Mr. Weiant wants to get at, and that is, 
was there any condition or understanding that under any circum¬ 
stances that the transaction should in any way be rev r oked or effected ? 
A. That I don’t know ® 

Q. Well, none so far as you are concerned ? A. Oh, it all ante¬ 
dated my administration. 

Q. But when you paid this $125,000 ? A. Well, that closed the 
contract. 

Q Was there any circumstances under which the company could 
be bound so as to revoke that transaction ? A. No. 

Q Have you ever learned whether it contained terms, or there 
was any condition in which the company was interested ? A. No, 
I never heard of any thing; I don’t know any thing about it; well, 
now, let me continue ; here is the $400,000 that went in to take the 
place of the agents’ balances and commuted commissions, and those 


491 


\ 


tilings which I did not consider worth any thing, which was paid 
into the company; the $125,000 went into the company to take the 
place of the real estate; that made $525,000; that w # as all the con¬ 
tract called for, to pay me back again; the $90,000, or somewhere 
from $90,000 to $100,000, I don’t remember which—it was about, 

1 think, $95,000, that is my impression—that was in a check, but I 
don’t remember to whose order it was made payable or drawn ; it 
might have been to the order of Mrs. Morgan, and it might have 
been to the order of Mr. Morgan; but, whoever it was, it was turned 
back again to the company. 

Q. Whose check was that? A. My check. 

Q. You gave that in addition to the $525,000? A. Yes, in ad¬ 
dition. 

Q. Then you gave them three checks, I understand you; one for 
$400,000, one for $125,000, and one for $95,000 ? A. Yes. 

Q And that check was paid into the treasury of the life insurance 
company, the North America Life Insurance Company , and they, 
after that, transferred this mortgage on the printing office an^d the 
other establishment ? A. No, they did not transfer the printing 
office ; it was simply a loan. 

By Mr. Weiant: 

Q. Was it an incorporated company? A. Yes, sir. 

Q. Was it a loan on their stock ? A. No. 

Q. On the building ? A. No. 

Q. What was was it on ? A. It was a loan to the company simply, 
on nothing. 

Q. What, no security ? A. None whatever that I ever discovered; 

I did not search into any of these things; I had nothing whatever 
to do with that; I simply saw them in the books, and directly I saw » 
them I said to Morgan, these must be taken care of. 

Q. When you came in as an officer of the company, what legal 
right had you to recognize them ? A. 1 did not recognize them : 
they were all closed up before I came in. 

Q. Well, it was rather strange that you ever recognized them indi¬ 
vidually, was it not? A. Well, let me tell you, those were debts; 
it was not something they owed, bat the money of the company had 
been loaned for it; I insisted that that money should be paid back 
out of this money I paid, and that is the way I paid it; Morgan was 
good for nothing. 

Q. Morgan was not ? A. No. 

By Mr. Moak : 

Q. I cannot understand how anybody can make money by buy¬ 
ing an insolvent insurance company; perhaps you can tell us how it 
was done? A. I will tell you what my expectations were; I ex¬ 
pected at the time I went into the North America Life Insurance 
Company, in 1874, like a great many other people, that we had got 
down to about hard-pan, you understand me; very many fellows 
made the same mistake; in fact, the country generally made that 


492 


mistake; I thought that real estate securities of all hinds had about 
reached the bottom figure, and that the next move there would b.e 
an upward tendency; now, the North America Life Insurance 
Company was iri this unfortunate condition ; its available securities 
it had, such as bonds and mortgages, were deposited at Albany for 
the security of its policyholders; its other real estate securities, as I 
have told you, were completely tied up in this McCool real estate ; 
I believed that with the coming spring we should be able to realize 
upon the real estate at prices that we took it for, because we took it 
in the spring of 1875 at prices twenty per cent less than the prices 
of 1873; in ordinarily good times we could make money out of it; 
I believed this, that I could take that company and carry it through, 
and bring it out and save its business to the Universal Life Insur¬ 
ance Company and to the policyholders of the North America Life 
Insurance Company, those who did not wish to change their policies 
I wished to be just as secure as those who did ; and that was a com¬ 
mercial risk that I took, thinking that when I had brought it out 
all right and straight and fair and square, that the directors or the 
policyholders of the North America Life Insurance Company would 
reward me fairly for my services. I tell you to-day that, although 
my expectations as to the improvement in the affairs have proved 
wrong, that if I had been let alone, that if it had not been for this 
raid made upon the company I should have saved it and brought it 
through ; after that suit was brought by those people to put the 
company into the hands of a receiver, I paid into the treasury of 
the North America Life Insurance Company $11,000, to pay the 
death losses that came in, and the last man that came in in advance 
of the receiver was paid. Let me say another thing; there is a 
gentleman who sits there [indicating Mr. C. M. Horton, of Buf¬ 
falo]. About a year ago—I didn’t know he was in the city until he 
just shook hands with me—about a year ago I received some letters 
from Mr. Horton ; he was very ugly; he made all sorts of threats; 
he wrote to the department and threatened to h^ve them investi¬ 
gated and said they were ' l cohorts with Furber ;” I did not know 
who Mr. Horton was, but I took some pains to find out who he was, 
and I found out, saving his presence, that he was a very respectable 
gentleman, and the former partner of Erastus Corning, and stood 
very high in Buffalo ; I wrote him a note stating that whenever he 
came to New York I would be glad to have him call in and see me, 
and look the institution over; he was insured in it, had one policy 
of $10,000 and another for $2,000 in it\ he came down one day 
early in January a year ago, and I was away; he was pretty mad, 
I can tell you, as I should judge from what Mr. Bewley and Mr. 
Montague said; he wanted to see Mr. Furber, and didn’t want 
any dealings with Mr. Bewley or Mr. Montague; he was told I was 
out of town, that I would be back in a few days, and when he came 
down he had better come in; he did, and walked into the office one 
morning and introduced himself to me ; I went up stairs into my 
room, and he was pretty ugly; I sat down and went over the whole 
history of the North America Life Insurance Company and showed 
it to him, all there was of it, all the way through, and showed 


493 


him the contract that I have been talking about, and then I took 
him down stairs and said, “ here are the books and accounts ot the 
company; ” I gave instructions to the young men there to exhibit to 
him any thing he wanted to see and left him ; I think he stopped the 
best part of two days investigating what I had done in connection 
with the North America Life Insurance Company; one day he came 
to my room and said, “Mr. Furber, I came here feeling very hard 
against you and I go away your friend ; and if any one wants to 
say any thing about your management of the North America Lite 
Insurance Company, I want to know it; ” I believe I have stated 
every thing that took plafce, have I not Mr. Horton ? 

Mr. Horton —Yes, I believe so. 

Q. The amount of it was, then, that this man, N. D. Morgan, seems 
to be the man who practically wrecked the company before you got 
a hold of it? A. Yes, sir; I have been particular to state this to you 
for this reason : my name has gone all over this country in public 
prints as a man who, two years ago, took possession of the North 
America Life Insurance Company, which, at that time, was a pros¬ 
perous company, doing a successful business, and brought it to its 
ruin ; I feel it is due to myself that it should go bioadcast through 
the country from this committee, my vindication, and for that reason 
I have been thus explicit to you. 

Q. In regard to the transaction of the North America, how much, 
if any thing, were your commissions or receipts on that ? A. 
Nothing; what I have received from the North America Life Insur¬ 
ance Company is a salary of $12,000, from the time I went in there. 

Q. But you are out $95,000 ? A. No; as near as I can estimate 
it, my commission on the business for the II niversal Life Comp any, 
under my contract—as near as I can estimate it, my commissions 
have been about $18,000, and two years salary ; that is all included 
in the $205,000 I gave you; I received $26,000 less $12,000 I paid 
into the company within two days before the receiver went in, to 
pay death losses. 

By Mr. W eiant : 

Q. I give you credit for a great deal of shrewdness and ability, 
and I do not want to misunderstand you ; I understood you to say 
that you paid out $95,000 of your own money ? A. Exactly. 

Q. And you took no security or obligation whatever to secure 
yourself, or repay yourself in any way whatever ? A. No, sir, in no 
way whatever; I expected to make it, but I failed. 

By Mr. Moak : 

Q. Then it was not entirely disinterested on your part ? A. No r 
I am no philanthropist; I am a square, business man. 




494 


By Mr. Weiant : 

Q. You expected to make it out of your commissions, or from 
whom, and how ? A. I expected, when I brought the company out 
all right, fair and square, that that would be made up to me. 

Q. How ? A. I believed the policyholders of the North America 
Life Insurance Company would make it up to me. 

Q. You trusted to their generosity, then ? A. Well I trusted to 
the sense of justice of the directors of the company. 

Q. Well, not to the policyholders? A. Yes, to the policyholders, 
to a certain extent, for I believed they would vote it to me for my 
services in saving it from the dilemma in which I found it. 

Q. You turned over $95,000 in money to Mrs. Morgan, and then 
it was turned back again in payment of obligations the company held 
against Morgan or this printing company ? A. Yes. 

Q. Well, what was done with reference to the debt of those parties ; 
were they canceled? A. Well, as far as the insurance company is 
concerned, they were paid ; this money was paid in and it paid those 
debts. 

Q. Then they received the benefit of the transaction, and not the 
company? A. Well, yes, the company received the benefit of the 
transaction, in having got its bad debts paid. 

Q. There was no necessity for your paying that $95,000, was 
there? A. Well, yes, if I hadn’t done it, the company would not 
have got the money. 

Q. Were those debts entirely worthless ? A. I regarded them so ; 
I did not regard them as worth any thing. 

Q. They were all family arrangements, by which the family got 
money from the company ? A. Yes, sir. 

Q. Were none of the parties worth any thing? A. Practically 
worth nothing; I think the-Kennard and Hay Company has gone 
up. 

Q. The amount of it was when you went m to the North America 
Life Insurance Company, you found N. D. Morgan there as presi¬ 
dent ? A. Yes. 

Q. And you found his son as vice-president ? A. No ; his son-in- 
law. 

Q. And one of his sons was secretary? A. Yes. 

Q. And another son in as actuary ? A. Yes. 

Q. And this money was loaned to the family ? A. Yes. 

Q. And he had loaned $2,000,000 of the assets of the company to 
a man named McCool, and taken mortgages, which mortgages you 
believed were tainted with usury ? A. I satisfied myself they were. 

Q. You ascertained to your satiafaction that bonuses had been paid 
to him; you ascertained that from the evidence brought before you ? 
A. Well, you may ascertain a thing from the facts that come to your 
knowledge; you believe a thing sometimes, without knowing abso¬ 
lutely all the facts; I believe he did, for the reason that I don’t 
believe any man will go to work and make builders’ loans , and put 
all the money in builders’ loans , when he could have loaned that 
money on buildings already erected; a man don’t usually take that 




495 


course ; I was led to believe that, too, from the position Mr. McCool 
took. 

Q. I on were led to draw that inference from Mr. McCool’s state¬ 
ments, were you ? A. I never could get from him any assertion, 
point blank, that they were usurious, but he would hint and insinu¬ 
ate that I couldn’t get any thing bach if I went to court. 

Q. Well, now, in regard to your connection with the Charter Oak; 
that is a Connecticut company, is it not? A. Yes, sir. 

Q. Before I go on, I will ask you a few more questions ; in making 
new arrangements you became president of the North America ? A. 
i es. 

Q. And did you retain your connection with the Universal at the 
same time? A. Yes. 

Q. And with any other company at the same time? A. With the 
Guardian. 

Q. What other changes were made with the officers of the North 
America; did you turn out the family ? A. No; I did not make 
any changes; they went out of their own will, and were very ready 
to get out. 

Q. In regard to the Charter Oak, what was there of that transac¬ 
tion ? A. Shall I tell you that from beginning to end ? 

Q. Yes ? A. On or about the 12th day of October, 1875, I was 
for the first time in my life, brought into the presence of E. R. Wig- 
gin, of Boston, now the president of the Charter Oak Life Insur¬ 
ance Company, of Hartford, Conn.; I was introduced to him as a 
gentleman, who was authorized by the officers and directors of the 
Charter Oak Life Insurance Company, of Hartford, Conn., to nego¬ 
tiate for the sale of $135,000 worth of the capital stock of the Char¬ 
ter Oak Life Insurance Company; the reason that the officers and 
directors of that company desired to sell their stock was this: the 
company for the previous two or three years, had been very unfor¬ 
tunate. 

Q. How much was their capital stock ? A. Two hundred thou¬ 
sand dollars; as I was saying, for two or three years previous to this 
time, that company had been very unfortunate in some of its invest¬ 
ments; among other things, the president, Mr. Walkley, had under¬ 
taken to build the Connecticut valley railroad, which runs from Say- 
brook to Hartford, and in that had invested about a million and a- 
half of the company’s funds in the bonds of the Connecticut valley 
railroad ; other unfortunate investments had been made ; the Super¬ 
intendent of Insurance of Connecticut made an examination into the 
affairs of the company in the spring of 1875, and commented very 
severely on its management in his report, and insisted that there 
should'be some change in the management of the company; he was 
not satisfied that the^company should go under its old management; 
I said to Judge Wiggin, at this interview in October, 1875, when I 
saw him first, what evidence have you to show me that you are autho¬ 
rized to negotiate for the sale of stock in this way; I have heard a 
great many rumors one way and another about the sale of the stock 
of the company, and I want to know whether you are authorized by 
the directors and stockholders to make the negotiation ? He said he 


496 


was, and satisfied me, to my entire satisfaction, that he was so autho¬ 
rized; the next question I asked Mr. Wiggins was this: what 
entangling alliances are there in reference to this matter; you are 
not an insurance man; you came into New York, and what have 
you agreed to pay, if any thing; what promises are there in this 
case ? He then said to me as follows ; says he, I have agreed to pay 
a certain gentleman $20,000 if this transaction goes through ; I said 
to him, how did you happen to agree to pay any such sum of money 
as that? Says he, I will explain that to you; he said he came to New 
York the previous summer, along in August, in the interest of him¬ 
self and certain capitalists in Boston, who had conceived the idea of 
getting the control of a line of railroads from the Sound up through 
Connecticut, Massachusetts, and Yermont and New Hampshire ; the 
Connecticut Valley railroad was then in operation from Say brook to 
Hartford ; there was then in process of construction what is now 
known as the Connecticut Central railroad which runs from Hart¬ 
ford to Springfield; there the Athol road and two or three roads 
would make a continuous line of railroads, up through those States, 
and make a competing line with the New London road over the New 
Haven and Hartford road; they conceived the idea of getting hold 
of these railroads, and he came to New York for the purpose of 
seeing if he could not negotiate for the purchase of the second 
mortgage bonds of the Charter Oak, or ii he could not get control 
of the bonds by getting control of the company, and so get the con¬ 
trol of the roads. 

Q. He could not have obtained the control of the roads by getting 
those bonds? A. No; but they had not paid any interest and he - 
could take possession under the bonds; they were second mortgage 
bonds; he said to me that he met, or was introduced to Mr. J. C. 
Horton ; that Mr. J. C. Horton professed to have such an influence 
with the company, or to be able to bring such an influence through 
himself and friends, as to enable him to secure the purchase of the 
bonds upon very favorable terms; and he would exercise that influ¬ 
ence for a commission of $20,000, if the trade was successful. 

Q. But I thought the company owned the bonds ? A. So they 
did; but Mr. Horton professed to be able to procure the sale of them ; 
this was before Mr. Wiggins had any thing to do with the Charter 
Oak. 

Q. Mr. Walkley was president then, was he? A. Yes,his object 
was to get the control of the railroad, he having been a railroad man ; 
Mr. Horton stated that he could bring, and that his associations and 
coimections were such that he could obtain the sale of those bonds to 
Judge Wiggin from the company, and he was to receive $20,000 for 
doing it, for his commission, for buying them up in the regular way ; 
that negotiation fell through for the reason among other things that 
the other Boston capitalists who were going into the arrangement 
dropped out; they were going in with Judge Wiggin to secure this 
line of railroads, but in the meantime Judge Wiggin had been brought 
into contact with the officers of the Charter OakLife Insurance Com¬ 
pany in connection with the purchase of these bonds; and that ori¬ 
ginal plan of getting the railroads having failed, led to the question 


497 


of Judge Wiggin negotiating the sale of the stock of the company, 
the stock of the insurance company I mean, for the reason that Mr. 
Steadman having insisted that there should 1)3 a change in the 
management, they wanted to sell their stock. Mr. Iforton insisted 
then, as Judge Wiggin stated to me , that if he bought the insurance 
company, or if he got control of the insurance company, he would 
have control of the Connecticut Valley Railroad bonds, he ought to 
have the commission just the same, although the orignal project, the 
plan for which the $20,000 was promised, had fallen through ; still 
he insisted that if he got control of the insurance company he would 
get control of the railroad, and he*was entitled to his commission. 
Judge Wiggin told me that, and I said to him, I don’t believe in this 
thing, but if you have made this agreement, pay it; good or bad, 
live up to it; if you have promised to pay $20,000 to that man, pay 
it, and if you have any thing to do with me, you must pay it, my 
belief being that if a man makes a bad bargain and lives up to it 
religiously, he will be less liable to do it again ; he did not give me 
the name of Mr. Horton at that time, but said a gentleman, and 1 
did not know until two or three weeks after who it was, until he 
told me who it was he had agreed to pay it to; that inter¬ 
view between myself and Judge Wiggin led to the purchase on my 
part of the stock of the Charter Oak Life Insurance Company, that 
and subsequent inquiry , and I will state in that connection that after 
I had been brought in contact with the officers of the Charter Oak Life 
Insurance Company, and after our arrangements were agreed upon, 
every thing perfected and determined upon what I was to do, before 
closing any arrangement whatever, I insisted upon going to Hart¬ 
ford and consulting with the Superintendent of the Insurance De¬ 
partment there, Mr. Steadman, as to the condition of the company; 

I submitted to him everv document in connection with the transac- 

«/ 

tion for his approval, and asked him this question : Mr. Steadman, you 
have examined into the affairs of this company, and I want to know 
first how much will it take, in your estimation, to place this company 
beyond any question of strength of reserves and every thing of that 
kind ( He told me that he believed the company had its full four 
per cent reserve; its assets were equal to four per cent reserve, and 
that is what they required there; well, he said that he believed their 
assets were fully equal to the full four per cent reserve, but that 
some of those items of assets it was pretty hard to pass them at 
their face; he thought they ought to be cut down, and he 
thought they ought to be cut down about $500,000; I asked 
him if $500,000 would make the company all right in his estima¬ 
tion ; he said yes; I said very good, it shall have it; I agreed to 
pay that amount, and I agreed to buy and did buy $135,00 in 
round numbers of the stock of that company, for which I paid $115 
a share. 

Q. Out of your ow n funds 1 A. Out of my own funds, yes,sir; 
this $500,000 that was put in there was put in in the way I will ex¬ 
plain presently ; before consenting to do that, or having any thing 
to do with it in any way, shape or manner, I had Mr. Steadman 
sign an approval, and I asked him this question: Mr. Steadman, if 


498 


I come here and do this, will you join hands with me to save that 
institution and bring it out all right? He said he would, and he 
has been true to his word from that hour to this. That $500,000 
was put in in this way; do you want to know that! 

Q. Yes? A. Mr. Edward Matthews, of the city of Yew York, 
owned a large amount of real estate in that city, and among other 
pieces of real estate that he owned was the corner of Broad street 
and Exchange place; he owned certain real estate which was ap¬ 
praised by Henry Morgan, E. S. Ludlow, and Mr. It. S. Hazard a 
short time before at $1,825,000; as I said, it was appraised by them 
at $1,825,000; it consists of Nos. 64 and 66 Broadway, forty-five 
feet front, running through to New street, and building on every 
foot of it; Nos. 78 and 80 Broadway, running through to New 
street. 

Q. What kind of building was on it ? A- It was a fine , elegant 
marble building. 

Q. What is it used for ? A. It is rented for offices, banks, brokers’ 
offices, and brings in a rental of $40,000 a year; the Union Trust 
Company's building, about eighty feet by 222, a building on all of 
it, a brown-stone building— 

Q. These three pieces ? A. It covered, also, No. 39 Broadway, 
which is a building about thirty feet front and 222 feet deep, run¬ 
ning through to Church street ; it covered, also, No. 39 Broad street 
and 34 and 36 New street. 

Q. Will you please give the whole of the numbers again, so that 
we can have them compact ? A. Seventy-eight and 80 Broadway, 
64 and 66 Broadway, 69, 71 and 73 Broadway, the Empire building, 
No. 39 Broadway, 38 Broad street and 34 and 36 New street; those 
were the pieces of property; that property was appraised, together 
with other property belonging to Edward Matthews, a short time 
before the transaction. 

Q. With a view to this transaction? A. No, I will tell you why 
it was appraised; Mr. Matthews wished to obtain a loan in Europe, 
and the European capitalists sent over to this country Mr. R. S. 
Hazard, once a large capitalist in New York, and he associated with 
himself Mr. Henry Morgan and E. S. Ludlow, and they made a very 
careful appraisal of the whole real estate, and Mr. Morgan and the 
others, including these pieces, fixed the value of the whole pieces 
at five million dollars , the value of these pieces I have spoken of 
being $1,825,000. 

By Mr. Moody : 

Q. How long since that was made ? A. That was a few months 
before this transaction occurred ; it was after the panic ; it was the 
latter part of 1874 or the early part of 1875 ; that property was 
subject to mortgages of $605,000 to various parties. 

Q. Was that all the incumbrauce upon all of it ? A. No, it was 
not all the incumbrance; I will say to you now that to go into the 
history of that transaction it will take a long time; that was the 
incumbrance upon it, and for any other incumbrance upon the 


property I held the money which was loaned to Edward Matthews 
under a mortgage I am now going to speak of. 


By Mr. Moak : 

Q. The short of it was the real estate got into the hands of the 
company subject to that incumbrance ? A. No, Edward Matthews 
got a mortgage of $800,000 on the property, in addition to this 
mortgage of the Charter Oak Life Insurance Company ; under the 
laws of Connecticut, the Charter Oak is allowed to loan fifty per cent 
of the value, and it had the right to loan $300,000, making $900,000 
on the property appraised at $1,825,000, and which was rented for 
between $160,000 and $170,000 a year; Mr. Edward Matthews, 
therefore, had a mortgage of $800,000 upon that property; he 
received for that mortgage $300,000 from the Charter Oak—that is, 

I induced the Charter Oak Life Insurance Company to pay to him 
$300,000, which I paid to various parties in clearing off the 
incumbrance upon the Appleton building in Broadway, for his 
account; Mr. Hiram Sibley, of Bochester, held a mortgage of 
$475,000, which was a blanket mortgage covering all Edward 
Matthews’ property ; he was about to proceed to foreclose it, and I 
made this arrangement with him to sell him this Appleton building 
in Broadway for $510,000, but in order to close that trade with 
Hiram Sibley, 1 had to first get rid of a mortgage of about $260,000 
which, together with the taxes required $300,000 to get rid of the 
incumbrance, to get the title to the property so that it could be con¬ 
veyed to Hiram Sibley in satisfaction of the blanket mortgage over 
the whole of Mr. Matthews’ property; of the $800,000 mortgage, 
$300,000 was applied that way ; for the other $500,000 I gave my 
own personal obligation to Edward Matthews, but that was a matter 
between him and myself with which this committee has nothing to 
do with; that $500,000 I have paid on the mortgage in the Charter 
Oak on that mortgagefor $800,000, and upon which they gave him 
the $300,000; the Charter Oak made a contract with me by which 
they agreed to pay me seven and a-half per cent on the premium 
income 

Q. Before you pass any further, I want to ask you a question right 
here ; you say the Charter Oak has got an $800,000 mortgage that 
they have the title to ? A. They did have it; they have acquired 
title to the real estate since. 

Q. Then the Charter Oak held the mortgage upon the real estate, 
which, with the former mortgage, cost the amount they were enti¬ 
tled to, as you have stated ? A. The Charter Oak Life Insurance 
Company loaned $300,000 on the mortgage, but I gave them the 
rest; the Charter Oak held the second mortgage, for it was good for 
the amount they loaned. 

Q. Well, they held $300,000 of the $800,000 mortgage ? A. Yes. 

Q. And you held the balance? A. No, I say they parted with only 
$300,000 of their assets, the balance of the mortgage I gave to them ; 
1 paid it in to them without any obligation on their part to return it 
to me, or to pay me any thing on it except by way of a commission 

32 


500 


on their receipts of seven and a.lialf per cent, and also a commission 
of fifty per cent on the saving of the reserve. 

Q, You don’t mean you paid all of the $800,000 except the 
$300,000 the company paid ? A. To Mr. Matthews? 

Q. Yes? A. Every dollar of it. 

Q. What security had you ? A. This contract I am going to tell 
you about. 

Q. You had no security other than that, and you say the company 
was under no obligation to pay you any amount back? A. Except 
by the contract, there was no obligation in any way, shape or man¬ 
ner ; that contract provides for a commission of seven and a-half per 
cent upon the premium receipts of the company, and fifty per cent 
of the saving of the reserve on any policies which were purchased or 
forfeited; that is what I call saving of the reserve; I think the con¬ 
tract reads on policies purchased ; I don’t think it reads policies 
lapsed. 

Q. That puts you in a situation where you have got a motive to 
procure the surrender of policies ? A. Not at all. 

Q. Why ? A. Simply for the reason that if a man keeps on pay¬ 
ing, his seven and a-half per cent will pay me back ; the receipts of 
the company are over $2,000,000 a year; suppose the two million 
dollars keep on paying, it pays me back the $500,000 in three years, 
if from no other source; now the contract provides that that con¬ 
tract may be canceled when that $500,000 shall have been paid back 
to me, with interest, together with such further sum as may be 
agreed upon between the company and myself for services rendered 
in this connection, and in case we cannot agree, for a reference. 

Q. In other words, the company has so much assets ? A. Yes. 

Q. It gives them to you? A. No, it simply gives me the profits 
of the commissions. 

Q. It gives you seven and a-half per cent of the receipts ? A. On 
the premiums that come in. 

Q. Then the company has got so much less ; hasn’t it ? A. Yes, 
of the premiums that come in. 

Q. For the $500,000 which you gave, it gives you the premiums 
in the future? A. Yes; I will state a commercial case, which, to my 
mind, exactly meets this ; suppose you have a contract with the gov¬ 
ernment to furnish 100,000 army overcoats at fifteen dollars apiece ; 
you have bought the cloth and bought all the materials, and figured 
it down to a fine point, and you are satisfied that you can furnish 
them at twelve dollars each; now you are sure to make $300,000 out 
of the contract if you carry it through; but when you bought the 
material you paid part cash, and gave notes for a part, relying upon 
certain money coming in to meet the expenses ; that source fails you ; 
the man you relied upon has failed and busted, and you cannot get 
the money; you have to pay your notes or you will break, and if 
you break that $300,000 which you are sure to make if you carry 
out the contract, you will lose; you come to me and say : “ I must 
have $200,000 to-morrow or I shall lose a surety of over $300,000 ; ” 

I say to you, “ I will not lend you $200,000, but I will buy out two- 
thirds of the profits of the contract you have with the government, 


501 


und you must give me an order on the government to pay me two dol¬ 
lars on every coat you deliver;” now, you don’t owe me any tiling 
on that contract; if you die to-morrow, I have no claim on your 
estate ; you have sold me a part of the future profits of the contract 
you have with the government; so it is life insurance companies 
have contracts with the policyholders, if the company is allowed to 
go on, and its policyholders continue to pay their premiums, each 
payment, like each overcoat, is going to bring a certain profit to the 
company, and they say to me, “Mr. Furber we want so many thous¬ 
and dollars, or hundred thousand dollars, to make us sound, and if 
you will put tliat money in we will give you a certain portion of the 
profits on the premiums until the amount is paid now, when I 
had made that arrangement with the Charter Oak Company, and it 
had been approved by the Superintendent of the Insurance Depart 
ment in Connecticut, I said to Mr. Wiggins: “I want you to pay 
that $20,000he told me some two or three weeks afterwards that 
it had been paid, that the contract had been taken up and canceled; 
I never knew where the money went in any way, shape or manner; 
I did not know Mr. Horton, and never saw lnm, and didn’t know 
until the following summer that Mr. Lewis made anything out of it. 

Q. When you did that, how did you get into the Charter Oak ? 
A. Why I bought $135,000 worth of their stock. 

Q. Well, what position did you occupy in that? A. Financial 
manager, or, in other words, I managed its finances; 1 didn’t become 
a director. 

Q. Well, what is the financial manager? A. Well, I manage the 
finances of the institution. 

Q. What became of Wiggins, then ? A. Why he became presi¬ 
dent ; I became acquainted with him and he was a railroad man, and 
we had over a million of assets in the railroad, which, for years, had 
not paid the interest on the first mortgage bonds; it only made 
$0,000 net and had to borrow $04,000 to pay the interest on the first 
mortgage bonds, and I thought it would be all one man could do to 
take the management of the railroad : 1 knew him well as a railroad 
man, and I thought he could leave the institution there for me to 
take care of, and I made him the president of the Charter Oak Life 
Insurance Company, with the understanding that he should look 
after the railroad and bring it up, which he did, and increased the 
net earnings of that railroad to $150,000. 

Q. You said the title of the real estate is now in the Charter Oak, 
how is that brought about ? A. It is brought about in this way; on 
the fifteenth day of December last, I went to the office of Mr. Mat¬ 
thews to make some inquiries; I had not seen him then in some time 
and he said to me he was in financial difficulty ; he must have some 
money; he must have $400,000, and he wanted to know if I could 
not loan him that amount; I told him he had not any. tiling upon 
which I could loan him the amount of money ; he said he didn’t 
know what he should do *, finally I said, “I don’t know but I will 
contract with you for the purchase of the real estate; if you will 
make up between this and Saturday a statement of what real estate 
you have got down in this vicinity, which included all the real estate, 



502 


and also make up a statement of what you owe, and how much you 
must have to take you out of the difficulty, I will be down here and 
see what I can do with you.” On Saturday I went down to see him, 
and he had the statement of the property, including this property I 
have already referred to, and also including property known as No. 
57 Broadway; the property known as Nos. 38, 40 and 42 Broad¬ 
way, running through to New street; property known as 17, 19 and 
21 Broad street, and 58 Exchange place, being the corner in the same 
block opposite the Stock Exchange that Drexel and Morgan built 
upon; that property was appraised at the same time by Hazard and 
Ludlow, and Homer Morgan for $3,030,000; now, understand me, 
the whole property was appraised at $3,030,000; that property, at 
that time, was rented for $237,000, with about $30,000 or $40,000 
of vacant rooms; that property rented, four or live years ago, for 
about $400,000 a year and on that property, which these people ap¬ 
praised at $3,030,000, there were $948,000 for first mortgages to 
various parties, including the $605,000 I referred to before, and there 
was this mortgage of $800,000 to the Charter Oak, making $1,748,- 
000; as I explained to you before this, I had agreed with Edward 
Matthews to pay $265,000 of that to the Charter Oak ; my agree¬ 
ment with Edward Matthews was this : I will buy that property of 
$3,030,000, pay your liabilities of $948,000 to various parties, assume 
the mortgages to the Charter Oak, which, between you and I, stands 
at $535,000, and I will give you $500,000 in money, and I will ar¬ 
range $500,000 worth of indebtedness, and I will give you the 
second mortgage bonds of the Connecticut Valley railroad, $1,230,- 
000, of theirs at $1,047,000; I sold that property to the Charter 
Oak Life Insurance Company. 

Q. The short of it is, you swapped off your Connecticut railroad 
bonds for real estate in New York, then? A. Yes; 1 converted an 
asset which stood on our books at $1,050,000, which there is nobody 
at this time ever believes it will pay its interest in ten years, for real 
estate which is paying to-day seven per cent; and these Connecticut 
Valley Railroad bonds, by that means, are paying us to-day seven per 
cent. 

Q. Well, how did you get the property? A. It was conveyed to 
me, and I sold it to the Charter Oak; they assumed $948,000 of the 
first mortgages, $800,000 of their own mortgage, and $235,000 in 
cash, and $1,047,000 in Connecticut Valley bonds, which I had pur¬ 
chased of them, which makes $3,030,000; I gave Matthews $500,- 
000, which was the $235,000 they gave me, and $230,000 I took of 
him, so as to make the Charter Oak get it at just what it cost me; 
in other words, I bought the real estate and turned it over to the 
Charter Oak, without one dollar to me, except the profit I have made 
by reason of its making my stock in the company so much the better; 
and I have converted for them $1,047,000 of assets, that -*ere of no 
value to us, no income-producing value, and no prospect of any income- 
producing value, I have converted it into real estate that is paying 
to-day an income of seven per cent. 


503 


Q. Let us find out how you stand with regard to the whole insur¬ 
ance companies, and how many insurance companies you are ? A. 
What do you mean ; recapitulate it? 

Q. 1 es, that is what T want? A. Well, I am the vice-president 
of the Universal Life Insurance Company, and financial manager of 
the Charter (Oak Life Insurance Company. 

Q. And those are the only positions you hold? A. Those are the 
only positions I hold. 

Q. There have been several cases where officers of one corporation 
have also been officers of another, in which, whether judicious or 
not, they have made some, in my judgment, and I think in any one 
else’s, poor investments, from one corporation to another; what do 
you say to a man being allowed to occupy such a position as that ? 
A. Well, my opinion in regard to that matter is, that it depends 
entirely upon the man. 

Q. Weil, supposing he is not so bright and honest as you might 
be, for example ? A. Then, if he is not bright nor honest, he had 
better not get into the position. 

Q. Well, suppose he has got the two positions, and has not got 
either brightness or honesty ? A. Why, then it is just twice as bad. 

Q. Well, what do you say to your occupying the position, for in¬ 
stance, in the Universal, as vice-president, and financial manager of 
the Charter Oak; suppose either one of them got into trouble, do 
you not think it would be a strong motive to use the funds of one to 
help the other; I don’t mean to say you would do it, but would it 
not be a strong motive to do so ? A. I do not care what the 
motive may be, I shouldn’t do it; it depends, as I told you before, 
upon the man ; if he is neither honest nor bright, he ought not to be 
in either company, and if in two companies it is twice as bad; in all 
relations of life men occupy different positions, where perhaps there 
may be a time when different interests may conflict; there may be 
a temptation, at some time, for a man to be dishonest under those 
circumstances; but at the same time other circumstances would 
come up which would induce him to be honest; or, in other words, 
which would not pay him to be dishonest. 

Q. Well, how much of the stock in the Universal do you own ? 
A. Ten thousand dollars worth. 

Q. Who owns the balance of it ? A. Oh, it is divided up between 
thirty or forty different people. 

Q. Well, who are the largest stockholders? A. Mr. Marquand, Mr. 
Win. G-. Lambert, Mr. Henry Hay, Mr. Stephen Babcock, and Mr. 
Henry B. Hyde ; they are among the largest stockholders. 

Q. How much does Mr. Hyde own? A. I don’t know exactly; 
I don’t keep a run of those things. 

Q. To what extent has the North America, or has the Universal, 
been obtaining the surrenders of the policies of the North America; 
or, in other words, have there been agents out in various parts of the 
country for the purpose of obtaining the surrender of policies, and 
if so, to what extent ? A. As I stated in answer to Mr. Husted’s 


504 


question, the matter of change from the North America Life Insur¬ 
ance Company to the Universal Life Insurance Company has been 
a matter left to the opinion and discretion of the insured. 

Q. Well, yon don’t state to what extent it has taken place ? A. 
What do you mean—how many policies have been transferred ? 

Q. Yes? A. Oh, I judge somewhere about 4,000 have been 
transferred. 

Q. That is, from policies of the North America to policies of the 
Universal ? A. Yes, sir. 

Q. In those cases was the reserve to the credit of the policies in 
the North America transferred to the Universal? A. We have 
kept between the two companies a strict account of all those trans¬ 
actions. 

Q. Well, what is the basis of it? A. Well, the basis of it is this : 
Mr. A., we will say for example, is insured in the North America 
Life Insurance Company; we will say the reserve upon his policy is 
a hundred dollars; he has the right, on surrender of the policy, to 
sixty dollars, if you please; he uses that sixty dollars in payment of 
the premium on the policy issued by the Universal Life Insurance 
Company, at its rate at his present age; we charge the North Amer¬ 
ica Life Insurance Company in our books, and they credit us with 
the sixty dollars. 

Q. What becomes of the forty dollars? A. It belongs to the 
North America Life Insurance Company. 

Q. That they got ? A. That they got. 

Q. Has any portion of it been taken by anybody ? A. Nobody. 

Q. In no instance ? A. In no instance; you refer to the officers 
of the company ? 

Q. Yes? A. Never one dollar. 

Q. Neither you nor any one else? A. Neither me nor any one 
else, to my knowledge; I repeat and reiterate that the only income 
I have had I have given you. 

Q. In all cases where that is done, the per cent of the reserve 
which has not been paid or applied on the new policy, has remained 
in the hands of the North America ? A. Yes. 

Q. What is your salary in the Universal? A. Now? 

Q. Yes? A. Well, my salary is nominally $12,000. 

Q. What is it really? A. That is what it is, $12,000. 

Q. And you get no commission from any thing else? A None 
whatever. 

Q. Do you get any salary from the Charter Oak except what you 
get by profits on the contract you have made ? A. Yes, I get a sal¬ 
ary of $12,000 from the Charter Oak; my salary is nomin illy 
$12,000 ; $8,000 is paid to me, and $4,000 is not paid to me. 

Q. Do you receive from the Charter Oak any thing except the 
$12,000 ? A. Only the commissions under my contract on account 
of the money paid in. 


505 


Julius Hillburn, sworn. 

I _ - 

Examined by Mr. Moak : 

Q. Did you, at any time, borrow any money from any insurance 
company ? A. Yes, sir, from the New York Life. 

Q. When was it, or about when ? A. I think, as near as my 
memory serves me, it was 1868 or 1869. 

Q. Where do you reside ? A. I live in the city of New York. 

Q. In what place ? A. No. 28 East Twentieth street. 

Q. In I860 you borrowed some money of the New York Life? 
A. Yes, sir. 

Q. How much did you borrow? A. About $65,000 or $70,000, 
upon seven houses we were then building on Sixty-first street and 
Lexington avenue. 

Q. Who did you make the contract with ? A. The immediate 
negotiations were with Mr. Barton, the president of the company, 
and Mr. Beers; I think it was with Mr. Barton. 

Q. What was his position ? A. He was a director in the com¬ 
pany. 

Q What was Mr. Beers 1 position ? A. He was the vice-president. 

Q. What did you apply to them for,' and what occurred ; state it 
in your own way? A. We were building seven houses, as I stated, 
on Sixtv first street and Lexington avenue: the houses were under 
roof and nearly finished; I was one of the builders, and one was 
John McCool, a builder, and myself and father-in-law, Mr. Bern¬ 
stein, was to furnish the means; if there was any profits we were to 
divide it, and if there was any loss we were to share it; money was, 
at that time, two per cent on the street, as the saying is; that was 
more than we wanted to pay, and I went to the New York Life to 
get the money. 

Q. Who did you have the first communication with ? A. Barton ; 
he is a director, and Beers, the vice-president, and Mr. Franklin was 
president; he had something to do with it; I told them what I 
wanted, and they said I should put the application in writing, which 
I did, and I drew a diagram of the property, and they said they 
would send a surveyor up there to examine it, and if he approved of 
it, they would make the loan. 

Q. How much did you apply for? A. $70,000; it took two or 
three weeks for the search and examination to be made, and, finally, 
they said the security was safe, and they would make the loan; I 
said I was ready to give them the abstract of the titles, and they said 
to me, you had better go to the general agent. 

Q. Where was his place ? A. Nearly opposite the place where 
the office is now. 

Q. Was his name Levy? A. No; he was a young fellow, and 
there was an older man in the office with him. 

Q. Who told you to apply to the general agent ? A. One of them 
did, but it was spoken in a way as if it came from the whole thr«e 
together ; they said he lived across the street; the New York Life 


506 


then had die place where Delmonico’s is now; I went there, and he 
said, “This loan is all right, but you will have to take out a policy 
for $60,000 to get the loan ” 

Q. You had to give a mortgage at seven per cent; A. Yes. 

Q. And in addition to that you would have to take a policy ? A. 
Yes; $60,000, and the amount of it was, no policy no loan. 

Q. Unless you took out the policy you would not have the loan ? 
A. Yes; I said to him,this is stand-and-deliver business; it is high¬ 
way robbery ; this is a fraud ; and they said, if you don’t do that, that 
ends the transaction ; I told them I would consult my partners 
about it, and I went and told them ; we squealed and squirmed, and 
hated to do it, but it was so hard to get money that, finally, they 
said : “By George! you have got to do it! we have got to get the 
policies out and make allowance for getting the policies;” I met my 
brother-in-law’s boys, young boys, just about twenty-one, the young¬ 
est I could get so as to make the cost as low as possible, and those 
two and myself went up there and took out a policy of $20,000 on 
each, $60,000 in all; then, to search the titles they sent me to a 
lawyer, whose office was five or six stories high in a building, and 
they charged me $700 for searching the title, which I could have 
made a contract with the largest lawyers in Uew York to have done 
for $200, but they charged us $700, and disbursements, and they de¬ 
ducted that amount and the premium on the $60,000 from the 
amount of the loan. 

Q. How much was the premium ? A. Two thousand dollars odd. 

Q. They deducted $2,000 odd for that, you say, $700 for the law¬ 
yer and the disbursements? A. Yes. 

Q. Anything else ? A. Well, there was a small mortgage which 
they took up, and they deducted that as well, and then gave us the 
balance of $70,000. 

Q. When the first year came round on the policies, what did you 
do ? A. I went up there and said I have paid this premium for 
nothing ; the boys do not receive more than ten or fifteen dollars a 
week, and they are not capable of carrying $20,000, and I can’t afford 
to carry the $60,000; what will you give me for it; they laughed at 
me, and said “you can’t get any thing on those; but if you pay 
another premium, we will give you a paid-up policy for some small 
amount.” 

Q, Less than the premium you would have to pay? A. Less than 
what I would have to pay for the second premium ; I told them it 
w r as a stand-and-deliver policy, and I told them I considered the life 
insurance business a swindle ; but when I saw Mr. Beers’ testimony 
the other day, I sat down and wrote to Mr. Moak to show up the 
whole fraud. 

Q. What became of the mortgages ? A. I sold the property, and 
the people assumed the mortgages, and whether they have been paid 
or not I don’t know. 

Q. You sold the property subject to the mortgages? A. Yes, sir; 
I thought it an outrageous thing at that time, and I want it to go 
abroad that such things are done by large insurance companies; I 
wrote you a letter about it, if you remember, Mr. Moak. 


507 


a Q- Tlmt is the transaction as yon have stated : all there was of it? 

Q. And your transaction was with Mr. Beers and Mr. Barton, the 

geneial agent of the company, and the lawyer you have stated ? A. 
j-jXactJ y. 

Q. And yon paid them over $2,000 life insurance? A. Whatever 
tlie rate is; my recollection is it was $2,300. 

A And yon paid the lawyer $700 and his disbursements ? A. Yes, 
r could have got it done in the largest firm in New York for 

$-00 and expenses, because I have had a great many titles investi¬ 
gated. J 

Q. As T understand you, at the expiration of the first year you 
a owed all three policies to'lapse? A. Yes; to lapse, because of my 
inability to run them ; I would have had to pay for all three $20,000 
policies, as the young fellows could not do it, because they were 
woi king for me at fifteen dollars a week. 


Recess until four o’clock p.m. 


Afternoon Session. 


Theodore Western sworn. 

Examined by Mr. Moak : 

Q. Are you the architect that had charge of the building of what 
is called the Equitable building of New York? A. Tes, sir. 

Q. When was the first work done on that building—about when ? 
A. Work was commenced on the 3d day of May, 1874, as far as the 
construction was concerned. 

Q. When was it substantially completed ? A. It was completed 
about July, 1876. 

Q. Substantially completed in July, 1876 ? A. It was nearly com¬ 
pleted the first day of May following 1876 ; that is, except the 
Equitable offices. 

Q. It was begun in May, 1874 ? A. May, 1874. 

Q. And it was completed the first of May 1875, then, was it not? 
A. Well, yes; I meant 1875. 

Q. With the exception of what ? A. With the exception of the 
Equitable offices proper. 

Q. Occupied by the Equitable company, do you mean ? A. Occu¬ 
pied bv the Equitable society. 

Q. How soon were portions of it leased ? A. The leases com¬ 
menced on the 1st day of May, 1875—one year from the com¬ 
mencement. 



508 


Q. Why was it the other portion was so much longer in being 
completed ? A. The original offices of the Equitable are separated 
from the extension to which I presume you refer, by an intermediate 
wall, which wall had to be taken down with great care, and the 
society had the use of its original offices during the time of this 
work, and it was somewhat delayed in consequence. 

Q. Is there connected with that building a restaurant ? A. With 
that building ? 

Q Is there a restaurant in it where the employes take their meals ? 
A. Ho, sir; there is no restaurant in it. 

Q- Well, is there one connected with it ? A. There is an adjoin¬ 
ing building in Broadway, and there is an opening between the 
Equitable building and that. 

Q Is it Delmonieo’s? A, Yes, sir. 

> Q- Are not all the employes of the company furnished with their 
dinner there in a room in the company’s office? A. Ho, not in the 
company’s office ? it is in Delmonico’s; the original building extend¬ 
ed back about 130 feet from Broadway. 

Q. As I understand you the principal building was substantially 
completed the first of May, 1875, and then it was determined to make 
a change in the office of the Equitable and take and build an addi¬ 
tional piece in, and that is what made the difficulty in building it ? 
A. Perhaps I can give it clearer by explaining what was actually 
done; the original building of the society was built in 1870, and 
they occupied that portion of it. 

Q.,That portion in Broadway? A. Yes; in 1871, they built an 
addition—from 1874 up to the following July. 

Q. Well, where was that ? A. That was in Cedar street, and ran 
back immediately in the rear of their original building, and extended 
back thirty-three feet six inches on to Pine street. 

Q. There was a part of the now called Equitable building erected 
prior, in 1870 ? A. And completed in 1870. 

Q. Did you have charge of that? A. I did not, sir. 

Q. Do you know, as architect, what the actual expense of putting 
up that portion of the building you had charge of as architect, was ? 
A. 1 cannot give you the exact amount of that addition. 

•n* as n early as you can? A. Well, I should think it was a 

million and a-half of dollars, including the land. 

Q. How much of that was for the land, that million and a-half, I 
mean ? A. Well, I presume—I can’t tell you precisely. 

Q. I don’t ask you precisely; you can give about what the cost 

was ? A. Well, that, I should think, was in the neighborhood of 
$500,000. ’ 

n ^ building ? A. Ho, the land ; it may be more or less. 

. how much was the entire expense of the additional build- 

in & • w ^ ^bink it wap a million dollars, the additional building. 

. bu* Was that for building it and finishing it complete ? A. Yes, 
sir. 

, Q* .-Did you have a per centage on any thing connected with the 
uu ding, or on any part of the building, over the actual cost ? A. 

A o, sir; I was paid a salary. 


509 


Q • IIow much ? A. Fifteen thousand dollars a year. 

Q. Did you not have a per centage beside on any thing ? A. No, 
sir. 

Q. Did you draw the original plans for the addition ? A. No, sir. 

Q. Who did? A. The preliminary plans were drawn by a Mr. 
Kendall, the architect; all subsequent drawings were made by 
myself. 

Q. How did it happen, then, that he drew the original plans, and 
vou had the supervising of the erection of the building ? A. It 
happened in this way ; it was originally contemplated that I should 
take the entire charge of the construction and erection of the build¬ 
ing, and Mr. Kendall was to draw the plans and working drawings; 
but we were obliged to progress with rapidity in order to complete 
it in a year, and we were not getting the plans fast enough to go on, 
so that part of it was transferred to my office. 

Q. Was not the building built on the plans fixed at the commence¬ 
ment of it? A. Yes, sir. 

Q. Then how did it happen that you had control of the drawings? 
A. Well, Mr. Kendall and I were associated in that way. 

Q. Was he in your office? A. No, sir, but I represented the 
company so far as that was concerned ; Mr. Kendall was asked to 
make the plans the same as others; there was no competition, but 
two or three plans were submitted to the building committee under 
whose cognizance all these things were done; Mr. Kendall was 
eir 1 1 ' } drawings. 



A. I drew all the working plans. 


Q. Had Mr. Kendall, before the building was commenced, com¬ 
pleted the plans ? A. No, sir, he had not. 

Q. Well, you did not commence putting up the building before 
the plans were completed, did you ? A. Yes, sir, I did ; the general 
arrangement of the plans was completed, that is, the ground plans, 
and the elevation of the front on Cedar street and Pine street, but 
all the internal arrangements were left for subsequent drawing. 

Q. Well, these internal plans were drawn by you, then ? A. Yes, 
sir. 

Q. All of them? A. Yes, sir, all of them. 

Q. The plans Mr. Kendall drew were only the external plans ? 
A. The preliminary plans for the elevation on Cedar street and Pine 
street, that was all. 

Q. You say the entire cost of the building did not exceed 
$1,000,000 ? A. I could not give you the figures. 

Q. Well, about that? A. I should think about that. 

Q. Do you know what was paid for the land ? A. I don’t know 
precisely what the land cost. 

Q. Was there a percentage paid on the cost of the stone to any 
one? A. Not to my knowledge. 

Q. Not to any one? A. Not to anyone. 

Q. Was there a percentage paid to any one for the materials, to- 
your knowledge ? A. Not that I know of. 

Q. Or to your information ? A. Not to my information, to any 
one. 


510 


Q. How frequently did you furnish statements of the expenses ? 
A. The contracts on this building were done in this way; a building 
committee was designated by- the trustees, nine gentlemen. 

Q. Well, who was the building committee? A. The building 
committee consists of Mr. W. G- Lambert, Mr. H. A. Hurlbert, Mr. 
H. G. Maynard, Mr. James Low, Mr. James Young, and Mr. 
Tarbell. 

Q. Well, who were the other three? A. If I had a list of the 
directors, I should remember the names of the gentlemen ; I am not 
familiar with all their names . 

Q. Who was the chairman of the building committee ? A. Mr. 
Lambert was the chairman. 

Q. You stated it was built by the committee; how were the 
returns made; how did the committee ascertain at stated periods, or 
any particular period, what the expense was, or how it was going on ? 
A. There were constant meetings of the committee. 

Q. How frequently ? A. Sometimes three times a week; all the 
plans and details for the elevation and for the construction of the 
work were constantly submitted to them for their approval and dis¬ 
cussion, and nothing was adopted unless they so decided ; the con¬ 
tracts were made by their direction, and were contracts throughout; 
they were made upon approximate estimates made by myself, gen¬ 
erally submitted before the contracts were made ; bills of quantity 
were prepared, and printed specifications were made, and printed 
forms of proposal were made and printed, and then all the larger 
contracts for the work were advertised to be let to the lowest bidder 
that was responsible and satisfactory in the opinion of the committee ; 
the bids were required to be made on the proposals and the printed 
forms ; sureties were required in proportionate amounts to the amount 
of the contract, and the letting was made on that basis. 

Q. How frequently did you make returns to the committee or any 
member of the committee as to the expenditures on the building ? 
A. Every payment that was made was made on a certificate fur¬ 
nished by myself to that committee, subject to their approval; it 
was not paid until they approved it. 

. Q. Did you make a draft for a certain amount, for instance, or 
simply made a certificate ? A. Simply made a certificate. 

Q. That so much material had been furnished by A B? A. That 
such a contractor was entitled to such a payment. 

Q. Did you not at certain periods make a statement of the aggre¬ 
gate expense of that building? A. Yes, sir. 

Q. How often was that done ? A. Each certificate showed on its 
face the amount of money previonsly paid to that contractor, includ¬ 
ing the amount then certified to. 

Q. That simply gave the aggregate that man got ? A. The con¬ 
tracts were running, and the certificates showed what was expended 
up to that time. 

Q. Did you not at stated periods in some way make a statement, 
so that it would show them just what was expended in the aggregate 
on the building? A. Yes, sir. 


511 


Q. When did you make that ? A. At almost every meeting; just 
how much it had cost showed on the books of the committee." 

Q- Who were the contractors for stone ? A. Gilmore & Cheney 
of Boston ; that was for granite. 

Q. What was their bid ? A. Every bid was passed upon, and 
their bid was the lowest of seventeen. 

Q. Well, how much was their bid, I ask you? A. It was $98,000 
and some odd. 

Q. It was a round sum ? A. No, sir, it was not a round sum ; it 
was a bid based upon the amount of the stone expected to be 
furnished. 

Q. Was it at so much per cubic yard or cubic foot? A. It was 
at so much per cubic foot on the bill of quantities furnished by 
myself. 

Q. Well, how much per foot ? A. Well, it run gradually up to 
three dollars; it included all the carved work, the capitals, etc. 

Q. Was that upon the stone actually furnished? A. Yes, sir. 

Q. Placed upon the ground? A. No, sir; subject to the amount 
actually furnished on the work and measured. 

Q. They bid so much per cubic foot for stone to be approved by 
you, or by the architect of the building, and to be measured by an 
employee of the company ? A. To be measured by myself, yes. 

Q. Was any thing paid beyond the actual value of that stone, at 
the contract price, to this contractor ? A. Nothing whatever. 

Q. Or to any one else? A. Nor to any one else. 

Q. Was any commission paid to anyone ? A. No, sir. 

Q. Upon this stone, or as any condition of their getting a con* 
tract ? A. No, sir, not in the most remote degree ; not that I have 
any knowledge of. 

Q. Or information? A. Or information. 

Q. I suppose the contract for stone was for cut stone? A. Yes, 
sir; for cut stone delivered at any of the wharves, or piers, I should 
designate, and at the times I should require it. 

Q. At the city of New York? A. Yes, sir, and the mason was 
repuired to take it. 

Q. Who was the mason ? A. Jerome F. Smith. 

Q. In what way was the compensation he was to receive estimated ? 
A. Iiis work was let the same way that I have spoken of, by adver¬ 
tising, and a comparison of the bids, and on quantities furnished in 
the office, and proposals the same way; his contract was let, as far 
as the brick work is concerned, at so much per thousand for brick 
laid in the wall. 

Q. Did he have any thing to do besides furnishing the brick ? A. 
Furnishing and laying it. 

Q. Did he have"any thing to do with finishing the interior? A. 
Subsequently another contract was made. 

Q. He did not contract, then, for laying the brick ? A. Yes, sir, 
and for setting the granite, too. 

Q. Well, how much for laying the brick? A. Eighteen dollars 
per thousand. 

Q. How much for setting the granite ? A. A lump sum of eight 


/ 



512 


or nine thousand dollars; it included everything ; laying the brick 
in the wall, furnishing the brick, scaffolding, centers, etc. 

Q. Did that include all the work done in putting up the granite 
walls? A. Yes, sir. 

Q. That was included in his contract? A. Yes, sir. 

Q. Was the cement included in his contract, also? A. Yes, sir. 

Q. Or whatever else, it was set in. A. Yes, sir. 

Q. Was Mr. Smith paid any thing beyond the actual contract 
amount for the work he did at the contract prices ? A. Nothing 


whatever. 

Q. Not any thing? A. Not any thing. 

Q. Did any person to your knowledge, or information you have, 
receive any sum on account of that, or any gratuity? A. Not that 


I know of. 

Q. You say he had subsequently another contract, and substan¬ 
tially for finishing the interior; was it the mason work of the in¬ 
terior ? A. No, sir; what we call the fire-proof partition, which 
was the division of the interior room. 

Q. Is that all he had ? A. He also had the plastering, too ; that is 
to say, it was let to him. 

Q. That was let by contract ? A. Yes, sir ; that was let by con¬ 
tract, 

Q. How was he paid for the fire-proof wall ? A. By the square 
yard, as the work was laid. 

Q. Is it brick ? A. No ; it is a composition that is now furnished 
by the Fire-proof Building Company; it is made of the lime of teal 
and coal ashes, and matters that are non-combustible, and it is hollow 
and comparatively of small weight in comparison with solid brick 
work, for mere partition work. 

Q. He was paid for that by the yard? A. By the square yard, 
measured by myself. 

Q. At given prices ? A. At given prices. 

Q. What was that? A. I have forgotten precisely what it 


was. 

Q. Well, about what? A. I think it was about forty or fifty 
cents; somewhere between those amounts per square yard. 

Q. AW ell, beside that he had the plastering? A. He had the plas¬ 
tering. 

Q. How was he paid for the plastering, by the yard ? A. By the 
yard. 

Q. How much per yard? A. For tliree-coat work he got forty- 
two cents per yard, somewhere in that neighborhood. 

Q Well, was it all three-coat work? A. Yes, all three-coat 
work. 

Q. What other work was there done on the building other than 
that; there was the carpenter work, I suppose ? A. Yes, sir. 

Q. Well, who did the carpenter work? A. Well, Morton and 
Chesly, of Boston. 

Q. Well, how were they paid? A. On competition. 

Q. How was it got at ? A. The interior carpenter work was 
drawn in detail, and they made a lump sum of it. 


513 


^ Q. 1 ou made a lump contract, of so much in the aggregate? A. 
Yes, sir. 

Q. How much were they paid for the carpenter work? A. I can 
not remember. 

Q. Well, about how much ? A. About $65,000. 

Q. Was there any allowance, either by gratuity or commission, to 
any one, either directly or indirectly, on account of that work? A. 
N o, sir. 

Q. Well, or on account of any work? A. No, sir. 

Q. How much was the aggregate of the contract for the stone, as 
a whole? A. To the best of my recollection, it came somewhere 
between ninety-eight and one hundred thousand dollars. 

Q. In this contract with the man who laid the brick, did he furnish 
the brick? A. Yes, sir. 

Q. It was for the work and the brick combined? A. It was for 
furnishing the material, and included the laying of the brick, the 
scaffolding, the centers, and every thing else combined. 

Q. What sum was paid to him by reason of every thing except for 
these fire-proof walls, and the plastering? A. Well, I don’t know 
that I can separate it. 

Q. How much was paid to him in the aggregate ? A. In the 
aggregate, somewhere along about $150,000 ; I state these things 
without any precise figures at all, because they were definite settle¬ 
ments and they are all in the books of the company. 

Q. What else was paid, if any thing, on account of the building? 
A. Well, there was a large number of contracts made; there were 
elevators; there were portions concreted of the cellar floor, exclusive 
of the cellar itself, which was included in Smith’s contract; then 
there was the taking down of the old buildings, which were on the 
ground before, and which was included in separate items in Smith’s 
contract; then there was the separate shoring of the sidewalks, 
because we excavated twenty-two feet below the sidewalk, and the 
shoring of the surrounding buildings when we went below their 
foundations, and there was roof work and iron work to a very large 
amount. 


By Mr. Hale : 

Q. And glass, too, I suppose? A. Yes ; and glass too. 

By Mr. Moak : 

Q. The entire work, you say, cost about a million dollars ? A. In 
that neighborhood. 

Q. Upon any work of that kind, or in any place, was there any 
thing allowed by way of a bonus, gratuity or commission, or any 
thing else, to any one? A. Never, sir. 

Q. Either from any knowledge you have, or from any information 
you have received ? A. From any knowledge I have, or from any 
information I have received; and I would like to add here, that it 
would have been impossible for me not to have known it. 


514 


Q. During the time that work was going on was there any work 
going on for any one by these contractors; I mean any one connected 
with the company ? A. No, sir. 

Q. Either for officers or otherwise ? A. No, sir. 

Q. Has there been since ? A. There has been since for a small 
amount, for some granite contracts; they have furnished about 
$1,500 worth of granite for Mr. Hyde. 

Q. Any thing else'? A. Not that I know of. 

Q. Have any of the contractors, or any of the persons who fur¬ 
nished the material, or did any of the work connected with the 
Equitable building since furnished any materials or done any work 
for any of the officers or directors of the Equitable building, except 
this $1,500 that you say was paid for granite ? A. Not that I know 
of. 

Q. Or have heard of ? A. No, sir. 

Q Where was this $1,500 worth of granite work done ? A. It 
was used for the water table of Mr. Hyde’s house. 

Q. Where is it ? A. On Long Island. 

Q. Who is the contractor, do you know ? A. Thomas Overingtom 

Q. A different contractor? A. Yes, sir. 

Q. Does he do all the work? A. Yes, sir ; I believe he takes the 
whole contract. 

By Mr. Hale : 

Q. Is that entirely finished ? A. No, sir. 

By Mr. Moak : 

Q. He had nothing to do with the Equitable building, either one 
way or the other? A. No, sir. 

Adjourned until Tuesday, April 10th, at 3.30 p.m. 


515 


Tuesday, April 10, 1877. 


The committee met on Tuesday afternoon, April tenth, at 3.30 p. m. 
Present—The full committee. 


Shephard Homans sworn. 

Examined by Mr. Moak : 

Q. Are you in any way connected, at this time, with life insurance ? 
A. Yes, sir; I am. 

Q. To what extent ? A. I am president of a company called the 
Providence Savings Life Insurance Company. 

Q. When was it organized ? A. It was organized in August, 1875. 

Q. Prior to that time were you in any way connected with any 
other insurance company? A. I have been, as actuary, sir, for 
twenty-one years. 

Q. Before going into this company you are now in ? A. Ho; 
altogether up to this time. 

Q. Well, in what company? A. I was for most of the time act¬ 
uary of the Mutual Life Insurance Company. 

Q. Of Hew York? A. Of Hew York. 

Q. When did your connection with that company commence ? A. 
On the 1st of February, 1856. 

Q. In what capacity ? A. As actuary. 

Q. Previous to that time what insurance experience had you had ? 
A. I had had no experience in insurance whatever. 

Q. That was your first connection with life insurance in any way ? 
A. Yes, sir. 

Q. At that time who were the other officers of the company? A. At 
that time Mr. Winston was the president; there was no vice-presi¬ 
dent ; Isaac Abbott was secretary ; Dr. Post was medical examiner 

Q. This company was strictly mutual as you call it; doing busi¬ 
ness on the mutual plan ? A. Strictly mutual. 

Q. Will you explain to the committee what you know of the ob¬ 
taining or use of proxies in companies of that character; how they 
operate ; how they are used ; how obtained, and so on ? A. Proxies 
are obtained from policyholders, and are usually used by officers of 
the company with the view of strengthening their own position 
naturally;'and very frequently the agents are requested to obtain 
33 


516 


% 


such proxies; they are not limited to any definite time, so that a 
proxy given fifty years ago would be valid if cast now and not re¬ 
voked in the meantime. 

Q. How are they usually given, to a particular officer of the com¬ 
pany, or to certain persons by name? A. In the Mutual Life they 
are given by name. 

Q. To whom ? A. To F. S. Winston and Richard A. McCurdy ; 
those I have seen ; some are given in the name of the president, with¬ 
out mentioning the name. 


By Mr. Floyd-Jones. 

Q. Do the president and vice-president make it a sine qua non 
that they shall give the proxies or else be debarred from insurance? 
A. No, sir; they have no right to do that. 

By Mr. Moak : 

Q. To what extent were they held by officers when you were con¬ 
nected with the Mutual Life Insurance Company ? A. I have never 
counted them, sir, but they have them to a very large number; I 
don’t know how many thousands, but it must be a great many thou¬ 
sands. 

Q. What do you know, if any thing, as to the use of proxies for 
the purpose of enabling particular men to keep others in position ? 
A. I rather think, sir, the proxies have been kept to be used when 
there was an occasion for them ; but they have rarely been used, I 
think, actually; I know of only two or three instances, I think, in 
which they were actually used. 

Q. What instances were those ? A. One was an election I think 
in 1869; I recollect they were used at that time. 

Q. What was the occasion of their use ? A. Come to recollect 
that was in 1870, sir, not in 1869, and the occasion was a contested 
election as it was then called ; that is to say, there was two tickets in 
the field, one named by a committee of policyholders, the other by 
the officers of the company. 

Q. What was the result of their use on that occasion ? A. The 
result was an immense majority for the officers’ ticket. 

Q. And to what extent did the officers at that time hold proxies ? 
A. I have never counted them. 

Q. Well, have you not some approximate idea of the number voted 
on at that time? A. I have not. 


By Mr. Moody : 

Q. They cast thousands, did they not ? A. Oh, yes, they cast 
thousands, undoubtedly. 

Q. Were you present on that occasion? A. I was in the office, 
but did not atend the election. 

Q. You took no part in it ? A. No, sir. 

Q. What knowledge had you that proxies were used ? A. I saw 


517 


them cast and knew the fact at the time. 

Q. Yon were in the office at the time ? A. I was in the office at 
the time. 

Did yon hear the result declared, how many were cast ? A. I 
don’t know whether I did or not, sir. 

Q. Who cast the proxies ? A. Mr. Winston. 

By Mr. Cowdin : 

Q. What year was this? A. Eighteen hundred and seventy. 

By Mr. Moak : 

Q. On what other occasion were they used; I think you said you 
knew of one or two other occasions? A. Well, I said that was my 
impression; I don’t recollect of any other except the one I spoke of. 

Q. As a practical insurance man, what suggestion have you to make 
to the committee with regard to the proxies ? A. I think it is very 
dangerous to give proxies to last for an unlimited length of time; 
the occasion for which they are given may pass away, and such a 
necessity no longer exist, and they may be used and cast for some¬ 
thing entirely different and contrary to the interests or desires of the 
policyholders by whom they were given. 

By Mr. Weiant : 

Q. A man’s policy may lapse? A. Yes, then the proxv is void. 

Q. That may be, but are they then taken out ? A. 'they ought 
to be taken out by those whose duty it is to examine them. 

Q. Well, whose duty would that be? A. Why, it would be the 
duty of the officers. 

Q. Well, who is to know whether they do it or not? A. No one 
knows but the officers themselves. 

Q. Then there is nothing to prevent them using them ? A. No, 
there is nothing that would prevent their using them, only it would 
invalidate the election. 

Q. You mean if that was discovered? A. Certainly, I mean if it 
was discovered it would invalidate the election. 

By Mr. Moak : 

Q. That would depend altogether on the majority, wouldn’t it ? 
A. Yes, I suppose that would govern it. 

Q. Take a company, for instance, with $100,000 capital, where the 
assets may be millions, what suggestion have you to make with re¬ 
gard to that class of company, where the owner of a small amount 
of capital stock might vote upon and virtually control a good many 
millions of assets? A. I should think it would be a dangerous 
power if policyholders have not a right to vote in regard to the dis¬ 
position and management of their own money. 

Q. Well, how would you obviate it in a stock company ? A. I 
should provide that in companies where the surplus was equal to or 
larger than the capital stock, that then the policyholders should be 
allowed as a matter of right to vote. 


518 


By Mr. Flo yd- Jones : 

Q,. Have not the policyholders the right to withdraw their proxies 
at any time? A. Yes, but it is never done. 

By Mr. Moak ? 

Q, Your idea is that when the surplus exceeds the amount of stock, 
that policyholders have an equal interest then with the stockholders, 
and that then policyholders should have an equal right to vote ? A. 
Yes, sir. 

By Mr. W eiant : 

Q. What is your company ? A. A stock company. 

Q. Purely capital stock ? A. Ho, it has a capital stock and does 
business on the mutual plan. 

Q. ’Tis a mixed company? A. Yes, sir. 

Q. Ho you have proxies in your company? A. Ho, sir, the com¬ 
pany is too small. 

By Mr. Moak : 

Q. With reference to the management of insurance companies, 
what can you suggest to the committee; suppose this case: I believe, 
if I understand the national banking law, there is a provision in that 
that the officers of a company shall not hold proxies, I believe I am 
right, that is the provision of the law ? A. I believe that is the 
case. 

Q. What do you say as to the propriety of a law of that kind 
prohibiting the officers or directors of a company holding proxies ? 
A. I should think it would be a very just law. 

Q. Can you tell how it would operate ? A. Then the policy¬ 
holders would have a voice in the matters of management in a natural 
way ; the officers might designate a committee of trustees, men in 
whom the policyholders would have confidence, who would hold the 
proxies and cast them as their judgment would dictate, and as in 
their judgment would best subserve the interests of the policy¬ 
holders. 

Q. Suppose that were to be the law, what is to prevent the officers 
of the company having a committee appointed in their interests, 
and they knowing who the policyholders are, and also knowing the 
general agent, what would prevent their obtaining proxies through a 
friend and so controlling an election the same as they would if the 
proxies were in their own hands ? A. I suppose there is no way of 
controlling the officers in any case ; but if the proxies were put in 
the hands of independent men, the supposition is that they would 
be used independently, and, if necessity required, for the interest of 
the policyholder. 

Q. What do you say as to the management of a company, take for 
instance the Mutual Life, with which you were connected ; you were 
connected with that for how many years ? A. I was connected with 
that for fifteen or seventeen years. 


519 


Q. What time did you commence with it, and cease your connec¬ 
tion with it ? A. My connection with it ceased as actuary in 1871, 
and as consulting actuary in the latter part of 1872. 

By Mr. Floyd-Jones: 

Q. I give a man a power of attorney to do any thing for me, in 
case I want it done and have not the time to attend to it myself; 
should not policyholders be allowed to give a power of attorney or a 
proxy, to any one, authorizing them to vote, the same as any other 
person has; to give the power of attorney? A. They have that 
power now. 

Q. 1 understood you to say you disapproved of the plan ? A. No, 
sir, not at all. 

By Mr. Cowdin : 

Q. You disapprove of the plan of executing proxies, do you ? A. 
I disapprove of the method in which proxies are given in certain 
mutual companies, because it enables the officers to exert an amount 
of power which it is very difficult to counteract; I object also, or 
rather it is my opinion, that if proxies were limited to a single elec¬ 
tion for which they were given to a definite time, say one year, or 
ninety days, or sixty days, or thirty days, whatever it may be, that 
It would have a wholesome check. 

Q. For an example, if a man takes out a policy through an agent, 
the agent suggests he had better, as a matter of precaution, leave the 
proxy with the officers of the company; what particular objection is 
there to that ? A. The objection is it gives an undue amount of 
power to the officers in controlling a company; it seems to me, and 
unless there is a concerted movement on the part of the policyhold¬ 
ers, there is no possibility of shaking it; for it is a fact that he 
throws a great deal of concentrated power in the hands of officers ; 
yet if it is wise to so concentrate that power, my objection is of no 
avail. 

Q. If the proxy is invalid after the year without renewal, would 
there be any objection to it then ? A. No, sir. 

By Mr. Moak : 

Q. Then in that case what provision would you suggest that they 
should not be given to the officers of the company direct; what 
course would you suggest to prevent their getting them ? A. I 
should prefer that the officers or directors should not have the proxies 
at any rate. 

Bv Mr. Weiant: 

Q. Would not that induce persons outside to get proxies for the 
purpose of throwing the officers out ? A. No; if the board desig¬ 
nated five gentlemen as a committee, who should be specially desig¬ 
nated to receive the proxies, I think every one who was satisfied 
with the management would transmit the proxies to the committee. 


520 


Q. Well, would not that be the same as giving them to the officers ? 
A. No, sir. 

Q. Well, why not ? A. Because the committee would cast the 
proxies. 

Q. And you think the officers could not control the committee ? 
A. No, sir. 

By Mr. Cowdin : 

Q. Here is a company with $80,000,000 of assets to take care of > 
is it not part of the duty of the officers to have that in their minds, 
and be on their guard, lest there should be some secret organization 
that might come in there and spring a trap on them, and get posses¬ 
sion of the company and control the assets? A. Undoubtedly they 
should be on their guard. 

Q. Is it not part of the duty of the officers to be reasonably on 
their guard against such a contingency? A. Not more so than a 
banking institution, I think. 

Q. That is not quite an answer to my question? A. Well, I say 
undoubtedly there should be. 

Q. Do you know, or have you information of any case, or of any 
case where outsiders have secretly obtained proxies, and thus ousted 
the officers of the company ? A. Yes; in the case of the Mutual 
Life itself it was done. 

By Mr. Moak : 

Q. When was it done ? A. It was done in 1853. 

Q. Will you state what there was of that * A. In 1853, Mr. 
Joseph B. Collins was president of the Mutual Life Insurance Com¬ 
pany, and Mr. Winston, by securing proxies, was enabled to put 
nine new trustees in and secure to himself the position as president. 

Q. And unseat Mr. Collins? A. Yes. 

By Mr. Cowdin : 

Q. Do you know that of your own knowledge ? A. I don’t know 
to what degree I can answer that question; I was not in New York 
at the time, but I know it from reading accounts at the time; I think 
there is just the danger that you ask if it should not be avoided, that 
a person might in any large company secretly collect a large number 
of proxies, and in spite of the opposition of the officers, succeed in 
putting in new trustees; I think there is an element of danger in it 
as well as an element of safety. 

By Mr. Moak : 

Q. What position did Mr. Winston hold in the company before? 
A. He was a trustee only; a member of a committee, probably. 

Q. What way is there for a man who is a policyholder in the 
Mutual Life, and who desires to remedy what he supposes to be im¬ 
proper action on the part of the officers or improper management of 
the business of the company, how can he obtain a knowledge of 


521 


who the policyholders are, unless he is in the company ? A. It 
would be impossible for a single man to control an election ; the only 
way to accomplish that, would be by a united action on the part of 
a number of policyholders. 

Q. Well, supposing I am a policyholder in the Mutual Life; I 
select that company because it is the one you have been speaking 
about; I come to the conclusion that I will consult the policyholders 
upon a matter that I believe to be wrong, and if they agree with me, 
ask them to vote to remedy it; how in the world am I going to find 
out who they are, and get the proxies of any number of them, how 
can I find out where they are to be got at ? A. The only way would 
be by getting access to the company’s books ; which would be very 
difficult, or advertising, or getting a list of the policyholders from 
the general agent. 

Q. Well, there would be little chance of getting a list from the 
general agent, as the general agents are in favor of those in power, 
are they not? A. Naturally they would be. 

Q. And dependent upon their approval for future profits? A. 
Undoubtedly. 

Q. Then you would hardly think it probable or practicable to get 
any information from an agent as to who the policyholders were ? 

A. It would be doubtful if you would. 

, • 

By Mr. Flo yd-Jones : 

Q. Has not the policyholder a right to get access to the list of 
policyholders, by making a request to the officers of the company ? 
A. I suppose he would have the right. 

By Mr. Moak. 

Q. Has that ever been done? A. Yes ; it was done in one case; 
there was a policyholder, whose name was Mr. McCullogh, was dis¬ 
satisfied, and he obtained leave to examine the books and accounts of 
the company; he asked leave and it was granted him. 

Q. When was that? A- In 1869 or 1870. 

Q. Was he given full and free access to the books? A. That I 
can’t say. 

Q. Did he attempt to get up an opposition ticket ? A. He was in 
opposition to the officers of the Mutual Life. 

Q. Did he start an opposition ticket ? A. Not to my knowledge. 

Q. Did he have any thing to do with organizing or attempting to 
unseat the officers in 1870; or, in other words, I want to know 
whether he was one of the parties moving in that direction ? A. I 
think he was in sympathy with the movement; whether he was an 
active party in it I cannot say ; I don’t wish to be understood as say¬ 
ing that it was an effort to unseat the officers*, but to introduce some 
new members into the board; it might have resulted in unseating 
the officers. 

Q. How many trustees are elected each year ? A. There are 
thirty-six in all: their terms are four years, so that nine go out each 
year. 


522 


Q. Were nine new men running? A. Not altogether; some trus¬ 
tees are on both tickets. 

Q. To what extent? A. Not to a very large extent; Mr. Bancock 
was on both tickets, and there may have been one or two others. 

Q. In regard to the control of a company by purchase of a stock; 
can you give the committee any information of cases of that charac¬ 
ter? A. Well, the laws of the State of New York require any 
company that now commences to have a stock of $100,000; no purely 
mutual company can start under the law; the charter of a company 
is drawn by its promoters, and is then laid before the Attorney-Gen¬ 
eral for his approval, and he approves it as a general rule ; the pro¬ 
moters of a company have generally exercised their right to put in 
such provisions as they thought proper, provided it would pass the 
criticism of the Attorney-General; in some cases the right to vote is 
given to the policyholders, and in some cases not. 

Q. Do you know of an instance where a majority of the stock of 
a corporation has been purchased for the purpose of controlling a 
company ; if so state it and give us any information as to how it can 
be managed? A. I know of several companies which we call mixed, 
where the stockholders control the election ; that is, the policyhold¬ 
ers have no right to vote ; the exact number of those cases I can’t 
give you now, but they can be easily obtained by looking at the 
charters of the companies which are published in the insurance re¬ 
port of 1868. 

Q. What I want to know is, can you give the committee any infor¬ 
mation of any case where a majority of the stock had been purchased 
for the purpose of controlling companies, do you know of any instance 
where that has been done ? A. Yes; I may sav it has been done in 
cases of companies which have been reinsured for instance; is that 
what you are coming to ? 

Q. Yes; well, how is that managed ? A. There have been cases 
where one company is reinsured by another that the officers of the 
company were purchasers of the stock; they purchased a stock at 
first so as to give them the control of the election. 

Q. Mention the cases you have knowledge of ? A. The case of 
the Widows and Orphans’ for instance. 

Q. What was that case? A. That case was one in which the coim 
pany was reinsured in another company called the Mutual Protection. 

Q. How was that done ? A. That was done by getting control of 
the majority, or perhaps nearly all of the stock, and transferring the 
company and its business to the Mutual Protection. 

Q* By whom; by officers of other companies ? A. That w as 
chiefly done by Mr. McCurdy, who was a director of the Widows 
and Orphans’ at that time. 

Q. Was he connected at that time with any other company ? A. 
He was vice-president and director of the Mutual Life. 

Q. And director of the Widows and Orphans’ ? A. Yes, sir. 

Q. What connection had he with the other company ? A. No 
connection with the other company. 

Q. How was that done ; who purchased the stock ? A. Mr. Mc¬ 
Curdy manipulated that matter, and by having a majority of the 


523 


stock he was enabled to transfer the company to the Mutual Pro¬ 
tection. 

Q. Who held the majority of the stock? A. No one person at 
that time. 

Q. How many? A. All the directors were stockholders, and some 
persons who were not directors owned some. 

Q. All the directors of what? A. All the directors of the Widows 
and Orphans’ had stock in it. 

Q. What company did they purchase? A. The officers of the 
Mutual Protection purchased the majority of the stock of the Widows 
and Orphans’. 

Q. I want to know how it was brought about, by the Mutual Pro¬ 
tection company getting control of the stock of the Widows and 
Orphans’; who did it ? A. At the meeting of the board of directors 
of the Widows and Orphans’, it was announced that a contract was 
ready for their approval to reinsure that company with the Mutual 
Protection. 

Q. Who brought it about? A. Mr. McCurdy. 

Q. Well, can’t you tell us what there is about the wdiole of the 
transaction; what I don’t see is how Mr. McCurdy had any interest 

id no in- 
Mr. Me- 

(/ 

Q. I want to get at how he did it, and why he did it ? A. The 
thing was carried through by the authority of the directors, and both 
companies were absorbed and eventually became one. 

Q. Then I understand you that Mr. McCurdy bought up sufficient 
of the stock to control it? A. Yes, sir; and by an act of the Legisla¬ 
ture the two companies were consolidated under the name of the 
Reserve Mutual, and the Reserve Mutual was afterwards transferred 
to the Guardian. 

Q. The Widows and Orphans’ was an existing corporation ? A. 
Yes, sir. 

Q. And Mr. McCurdy was vice-president and director of the Mu¬ 
tual Life of New York, and also a director of the Widows and 
Orphans’ ? A. Yes, sir. 

Q. And he and his triends obtained enough stock, either by pur¬ 
chase or otherwise, in the Widows and Orphans,' to control it ? A. 
Yes, sir. 

Q Who were its officers ? A. The president was Mr. Raymond, 
Mr. Grannis was the secretary, and the medical examiner was Dr. 
Winston. 

Q. Was he the medical examiner of the Mutual at the same time? 
A. Yes; and I was consulting actuary at the time. 

Q. When that was reinsured in the Mutual Protection, what 
became of the officers of it ? A. The officers of the Mutual Protec¬ 
tion were Mr Morgan, president, and Mr. Freeman, secretary. 

Q. What Mr. Freeman? A. A son of Pliny Freeman; Fred. 
Freeman. 

Q. \Fhat Mr. Morgan was that ? A. Mr. A. W. Morgan. 


in selling out a company he was interested m, to one he 1 
terest in whatever ? A. Well, it was brought about by 
Curdv. 


524 


Q. When the consolidation was effected, what interest had Mr. 
McCurdy in the new company ? A. I was employed by the officers 
of the Guardian Life Insurance Company to examine the Reserve 
Mutual, from the time I ceased to be a director and officer, up to the 
time of its transfer to the Guardian; I did so, and I found on ex¬ 
amining the books an account for agency expenses, $25,000; I 
thought this was a suspicious charge, and determined to look a little 
further into that matter, and asked for the check book, and on the 
stub of the check book there was the item of agency expenses, $25,- 
000; I called then for the canceled checks, to see who the money 
went to; on examining those checks, I found the checks before and 
after that were all in their proper places and numbers, but that check 
was missing; I reported the case to Mr. Gill, the president of the 
Guardian, as very suspicious ; at my suggestion he asked the presi¬ 
dent of the Reserve Mutual for an explanation; he said it was a 
confidential matter, but declined to give any explanation ; I suggest¬ 
ed to Mr. Gill that as he had assumed the responsibility of the 
matter, and no explanation was given him, he had better insist on 
an explanation being made, or put the matter in the hands of the 
counsel, Mr. Opdyke, and at my suggestion he insisted on receiving 
an explanation. 

Mr. Cowdin — You had better confine yourself to what you actu¬ 
ally know. 

Mr. Moak —-If an officer of the company or some other person 
had told him what had become of that money, it certainly would be 
evidence against the company, and it strikes me this committee ought 
not to exact any higher grade of evidence than would be required in 
a court of justice to prove a fact. 

Mr. Cowdin —We want all Mr. Homans can tell us of his own 
knowledge, but we don’t want any hearsay evidence. 

Mr. Moody —'Well, this is of his own knowledge. 

The Chairman —The testimony as reported will show the distinc¬ 
tion and the source of his information ; of course the Legislature 
may give whatever weight it thinks proper to it. 

Mr. Bliss [counsel]—It is proposed by this witness now to show 
that a certain president stated to him that a certain check went to a 
certain gentleman; I am here on behalf of that gentleman, and I say 
it never went there; I say that what that president told this gentle¬ 
man, and I have no doubt he did tell him so, was a lie ; bring that 
president here and let him swear to that, and let this man who is 
alleged to have received that check come here and answer it, but 
don’t bring in a third person in a statement made to him by some 
one else. 

Mr. Moak —It strikes me that if anything is testified to here 


525 


which is incorrect, and I don’t know what the witness is about to 
testify to, that it will be a very easy way for the gentleman who it is 
claimed has received it to come and deny it. 

Mr. Bliss — Is this committee to take cognizance of and give 
credence to what every one says? Mr. Morgan was the president, 
and can be obtained ; let him testify; Mr. Freeman, who bought 
the stock, can be readily obtained, let him testify; if either of those 
gentlemen told Mr. Ilomans, and I do not wish to be understood as 
stating that they did not so inform him that a certain transaction 
occurred when he was away, I submit that that is not what the com¬ 
mittee should take cognizance of. 

The Chairman —If it is denied or disputed then perhaps it is 
better to have the evidence first hand; but if it is not disputed then 
let us take it. 

Mr. Moak —IIow are you going to find out who to send for unless 
you do take it; I don’t know what this gentleman is going to testify 
to, but it strikes me you can’t tind out whether there is any truth in 
the statement he is about to make until you hear it. 

Mr. Skinner —Is he willing to testify that the president told him 
the money was given to some man ? 

Mr. Weiant —I should infer from his remarks that he is. 

Mr. Skinner— -Then let us hear it. 

Mr. Cowdin —We have now been in session for a long time, we 
have got a good deal of information and we expect to get a good 
deal more; my idea of an investigation is, that the witness shall tes¬ 
tify to what he know3 himself; I certainly desire nothing to be con¬ 
cealed, but let each witness tell what he knows of his own knowledge 
and stop there; if we want to know from the witness what others 
told them we shall never get through with our investigation, partic¬ 
ularly if we take hearsay testimony. 

The Chairman —The committee, in advance of hearing what the 
statement is, certainly cannot see the injury that can be done by 
stating it, or whether it will be necessary to call any one here to deny 
it or whether necessary to call any one to substantiate it; if there is 
nothing in the matter that concerns this committee it will be need¬ 
less and undesirable to call any witnesses, but is wise to have told in 
the first instance, if you can have it told what there is about it, so 
the committee may know what to do. 

Mr. Moody— Do I understand this witness is to state what the 
president told him. 


526 


Mr. Moak —That is what I suppose; I know nothing further than 
you do. 

Mr. Moody —Mr. Cowdin says let the president be called, but I 
insist that the witness can tell what the president told him. 

Mr. Moak —Although I don’t know what it is and have no 
information whatever, I submit the evidence is proper, whatever it 
may be. 

Mr. Bliss —You are going to get a statement, which I assert, 
whether the president said it or not, is not true; if the president 
will come here and say under oath that it is so, that will be another 
thing. 

Mr. Moody —If the president is willing to swear to one thing 
here, and another thing somewhere else, let him come and testify, 
but I submit we should hear this evidence. 

Mr. Bliss —What is to become of the third person then; I am 
here on behalf of the third person impugned; it is charged he got 
certain money, and the president of another company told this wit¬ 
ness so. 

Mr. Flo yd-Jones— It does not seem to me the witness is telling 
what the president said, but the president said to him, somebody else 
said so to him. 

Mr. Moak —I asked him what the president said he did with that 
check, to whom he gave it, and for what purpose ? 

The Chairman —I think he had better make the inquiry, and if it 
is deemed advisable, we can call the president to contradict it if he 
can. 

Q. Well, what did the president say in regard to the check? A. 
The president of the Guardian told me, but not the president of the 
Reserve Mutual; I had no conversation with him whatever. 

Q. Who was the president of the Guardian ? A. Mr. A. W. Gill 
was the president of the Guardian. 

Q. Where does he reside ? A. He resides in Hew York, I think. 

Q, How go on and state what he said ? A. He told me it was 
paid to Mr. Richard A. McCurdy, for his efforts in bringingabout 
the transfer, 

Q. This $25,000 ? A- This $25,000. 

Q. And you say the check which represented that amount was 
taken from the pile of canceled checks ? A. It was gone. 

Q. Did you ever find that check ? A. Ho, sir. 


527 


-By Mr. Cowdin : 

Q. Of which company was this check ? A. The check was by the 
Widows and Orphans’ Company, and the entry was in the cash books, 
“ agency expenses, $25,000.” 

By Mr. Moak : 

Q. About when was that transaction ? A. That transaction was 
in the month of October, 1871. 

By Mr. Cowdin : 

Q. The president of what company told you that ? A. The presi¬ 
dent of the Guardian, Mr. A. W. Gill. 

Q. Is he in New York at the present time? A. I don’t know; 
I think he is. 

By Mr. Moak : 

Q. How did Mr. Gill know what was done by the other company ? 
A. Mr. Gill was the president of the Guardian, which reinsured the 
Mutual Protection and the Widows and Orphans’, under the joint 
name of the Reserve Mutual, and I was employed by the president 
of the Guardian to look into the accounts of the Widows and 
Orphans’, after this first transfer. 

Q. Between this transfer to what company ? A. Between this 
transfer of the Widows and Orphans’ to the Mutual Protection, 
under the name of the Reserve Mutual, and the transfer of that 
company to the Guardian. 

Q. Then the Guardian had in it the Reserve, the Mutual Protec¬ 
tion, and the Widows and Orphans’ ? A. Yes, sir. 

Q. When was this conversation with Mr. Gill, or when was the 
conversation and examination ? A. That was at the time of the 
transfer, sir ; I think it was in the latter part of 1872 ; I am not 
sure. 


By Mr. Cowdin : 

Q. What transfer ? A. The transfer of the Reserve Mutual to 
the Guardian. 

By the Chairman : 

Q. Can you give the place and time? A. I don’t recollect the 
month or even the year. 

Q. And not even the year with certainty ? A. I think it was in 
1872. 

Q. Where did the conversation take place ? A. In the office of 
the president of the Guardian. 

Q. Between you and the president of the Guardian ? A. Yes 
sir. 

Q. Was any one else present ? A. I think not. 


528 


By Mr. Cowdin ; 

Q. How did Mr. Gill come to know what was done with the 
check that came from the Widows’ and Orphans’ ? A. Mr. Gill did 
not know what became of it, until he asked the president of the 
Reserve. 

Q. Who was the president of the Reserve ? A. Mr. Morgan. 

By the Chairman : 

Q. Mr. Gill simply stated to you what had been told him by the 
president of the Reserve, whose name was A. W. Morgan ? A. 
Yes, sir. 

By Mr. Floyd-Jones: 

In other words, Mr. Morgan tells Mr. Gill, Mr. Gill tells Mr. 
Homans, and Mr. Homans tells us. 

By Mr. Moody : 

Q. You don’t know who he gave the check to, and there is no way 
of finding out who gave the check ? A. Ho, I don’t know that there 
is any way of finding out who gave the check ; it is in the check 
book of the Widows’ and Orphans’. 

By Mr. Bliss ; 

Q. Mr. Morgan was president of the Mutual Protection ? A. Yes, 
sir. 

Q. The check was given by the Widows’ and Orphans’ ? A. i r es, 
sir. 

Q. And of that Mr. Morgan was not an officer? A. Yes, he 
was. 

Q. What was he ? A. Why, he was president of it. 

Q. That was after the check was given, wasn’t it ? A. Ho; I 
don’t know that as a fact. 

By Mr. Floyd-Jones : 

Q. You don’t know whether he was president at the time the check 
was given or not ? A. My impression is he was president at the 
time the check was given. 

Q. Of the Widows’ and Orphans’ ? A. Yes, sir. 

Q. And also of the Mutual Protection? A. Yes, sir. 

Q. When were they united ? A. In October, 1871; this transac¬ 
tion occurred in 1871. 

Q. When did this conversation with you occur? A, As I stated 
before, I cannot recollect the month or even the year; I think it was 
the latter part of 1872. 

Q. The conversation with you was in 1872, and the combination 
of the companies took place in 1871 ? A. Ho, sir; this was the 
second combination; the Widows’ and Orphans’ was first transferred 
to the Mutual Protection. 

Q. When was that ? A. In October, 1871; then by act of the 


529 


Legislature the names of the two companies were changed to the 
name of the Reserve Mutual ; that was in the winter of 1871-2 ; 
then in 1872, or possibly 1873, the Reserve Mutual was reinsured by 
the Guardian, and I was employed as expert to look into the accounts 
of the Reserve Mutual and report the result of my investigation to 
the president of the Guardian, which I did. 

By Mr. Moak : 

Q. And it was during that examination that this transaction which 
you have described occurred? A. Yes. 

By Mr. Bltss ; 

Q. Did not the check book show that the check was drawn three 
months after the Widows’ and Orphans’ was reinsured in the Mutual 
Protection ? A. No, sir; I think it was a few days after. 

Q. You will swear to that? A. You ask me to state a fact; I 
state the best of my recollection 

By the Chairman : 

Q. Only a few days after, you say ? A. A few days after. 

By Mr. Moak : 

Q. Now, when the Widows’ and Orphans’ ceased to exist, what 
connection had Mr. McCurdy with the new company, if any ? A. 
Nothing at all, sir. 

Q. Then his connection ceased with the new company, so far as 
you know? A. Yes; and I may say I think I would have known if 
it had been otherwise. 

Q. Then he was connected with the Mutual Life only? A. Yes, 
sir, after that. 

Q. You stated you were a director in the Widows and Orphans'? 
A. Yes, sir. 

Q. Was Mr. McCurdy a director also? A. Yes, sir; he was also. 

Q. IIow many directors of the Mutual were also directors of the 
Widows’ and Orphans’? A. Mr. Babcock, Mr. Bates, Mr. Odley, 
Mr. Seymour L. Ilusted, of Brooklyn; I should say about a-half of 
them were directors. 

Q. In addition to yourself and Mr. McCurdy ? A. About half of 
them altogether. 

Q. Now, let me understand you, that half of the directors of 
the Widows’ and Orphans’ were directors of the Mutual Life ? A. 
Yes. 

Q. What kind of a company was the Widows' and Orphans’, stock 
or mutual ? A. It was a mixed company; it had a guaranteed capi¬ 
tal of $200,000 I think. 

Q. When this company, the Widows' and Orphans’, reinsured in 
the Mutual Protection, what became of the stock of the Widows’ and 
Orphans’ ? A. The stock of the Widows’ and Orphans' was pur¬ 
chased by parties in the interest of the Mutual Protection, and in 
that way they obtained control of the company. 


530 


Q. At what price was the stock transferred ? A. It was at par, 
sir, I think. 

Q. Did you own any stock in the company ? A. No, sir; not at 
that time. 

Q. Then how could you be a director? A. I had some stock at 
one time, and then I sold it. 

Q. To whom ? A. I have forgotten ; it was a small amount of 
stock, and I sold it before this time. 

Q. Did you sell it with reference to that transaction ? A. No, 
sir. 

Q. Were you a director at the time this transaction occurred? 
A. Yes, sir, I was ; I was a director, and was present at the meet¬ 
ing. 

Q. What was there of the meeting ? A. The meeting was called 
for the purpose of making the transfer, or rather to approve the con¬ 
tract that was made before that; I opposed that as strongly as 1 
knew how to, but it was carried in spite of my opposition. 

Q. Who had prepared the contract ? A. Mr. McCurdy, the attor¬ 
ney and counsel of the Widows’ and Orphans’ at the time. 

Q. Then he occupied the position of vice-president of the Mutual 
Life, director of the Widows’ and Orphans’, and attorney for it? A. 
Yes, sir. 

Q. At the same time? A. Yes, sir. 

Q. That meeting was called to act upon that contract? A. Yes, 
sir. 

Q. That contract was finally ratified by the majority of the direc¬ 
tors; by a majority of the votes? A. Yes ; I think it was unani¬ 
mous ; my vote was not recorded in the negative ; I did not ask it 
to be; my vote was not recorded ; I did not vote in the affirmative, 
and have no recollection of being recorded in the affirmative. 

By Mr. Weiant : 

Q. You did not approve of that transaction? A. I did not, sir. 

Q. Will you tell us why? A. Well, the business of the Widows 5 
and Orphans’ was a very select business, and the company was in 
very excellent shape ; the business of the Mutual Protection was not 
good; it was not a good company ; in fact, it was a company that 
was not in good repute; and I stated to the board that if there was 
any necessity for the sale, and I did not think there was, but if there 
was a necessity, the best companies in the country would be glad to 
get hold of that business and pay a bonus for it; I have since found 
out, in an informal conversation with Mr. Beers of the New York 
Life, that he would have paid $100,000 for that business. 

Q. Was there any particular feature of that business to distinguish 
it from other companies ? A. No, sir ; it was a mixed company, 
with a guaranteed capital; I forget what it was, but $200,000, I 
think. 

By the Chairman : 

Q. How long had it been in existence ? A. I think six years. 


V 


531 

Q. What were its assets ? A. Over $2,000,000. 

Q. Do you know what became of the contract ? A. I do not. 

By Mr. Moak : 

Q. Was there any bonus paid ? A. I think not, except that one I 
spoke of; I never heard of any other. 

• , 

By Mr. Flo yd-Jones : 

Q. How is it, Mr. Homans, that you could vote and act in the 
company as a director and not be a stockholder? A. I presume, sir, 
when I sold my stock, I was not eligible as a director; I don’t recol¬ 
lect what the circumstances were ; I don’t think the question ever 
came up; if the question had come up, I probably would have been 
ruled out as a director, but I had no stock, to the best of my recol¬ 
lection, at the time of the transfer. 

By the Chairman : 

Q. The other officers must have known it, or could have known 
you had no stock? A. Yes, I presume so. 

By Mr. Husted : 

Q. Was it transferred in the books ? A. That I can’t tell; it may 
have been left on the books in my name ; they may have known it, 
and left it purposely on the book. 

By Mr. Cowdin : 

Q. You saw the annual report made prior to that transfer ? A. 
Yes, sir. 

Q. What was the character of the company ; did that not show 
the company was actually insolvent ? A. No, sir. 

Q. Then impaired ? A. No, sir, not impaired either ; the capital 
may have been impaired. 

Q. You had no knowledge as to how much? A. I don’t recollect. 

Q. Was it impaired sixty per cent should you say ? A. I should 
think not. 

Q. You would have known it, would you not, if it had been im¬ 
paired sixty per cent ? A. Yes, sir, I would have known it. 

Q. My impression is the report shows it was impaired to some¬ 
thing like sixty per cent ? A. I think not; it is my impression it 
was not impaired to that extent. 

Q. Was it not $60,000 out of $200,000 ? A. Well, that would be 
only thirty per cent. 

Q. Have you any such recollection that it was impaired $60,000 ? 
A. No; it was impaired somewhat but I don’t recollect the amount. 

By Mr. Moak : 

Q„ That was the stock? A. Yes. 

Q. But the reserve upon the policies was still intact ? A. Yes. 

Q. So the policyholders were amply protected ? A. Yes, sir. 

34 


532 


Q. It was only the stockholders who were going to lose anything ? 
A. That is all. 

Q. And this transfer, if a saving to any one, must have been to 
the stockholders instead of the policyholders? A. Yes, sir. 

Q. Your impression is, the stock was sold about par, what was 
sold to obtain control of the company? A. Yes, sir. 

Q. Now as to whether this business was a value to another com¬ 
pany independent of the mere profit it would jnake on the premium ; 
what was there of that ? A. The business was carefully selected, 
and had been the result of the labor of some five or six years; it was 
gotten together with great care and was in excellent condition. 

By the Chairman : 

Q. Y r ou had been in it also that time? A. I was in it all the time. 

By Mr. Moak : 

Q. If the business was carefully selected how do you account for 
the stock being impaired ? A. That resulted from the dividends to 
the policyholders being too large. 

Q. How large dividends have been declared to the stockholders ? 
A. The stockholders I think, never got more than legal interest on 
their stock. 

Q. But the dividends declared to the policyholders had been too 
much for the assets of the company ; was that why the stock became 
impaired ? A. The dividends were larger than ought to have been 
declared. 

Q. And it was in that way the deficit had occurred in the stock ? 
A. Yes, sir. 

By Mr. Cowdin : 

Q. Had you any thing to do with declaring the dividend ? A. I 
was consulting actuary, but at this particular dividend I was so par¬ 
ticularly engaged that I had nothing to do with it; it was stated in 
the books that I had nothing to do with it. 

By the Chairman : 

Q. Were you not a director? A. Yes, sir. 

Q. And did you not take any part in declaring the dividend? A. 
Yes!/ but I did not make the calculation as actuary at the time. 

Q. Did you vote in favor of declaring it ? A. Yes, sir. 

By Mr. Moak : 

Q. Are not most of those votes cast upon the c omputation of the 
actuary—the person who makes it ? A. Yes, sir. 

Q, So it is in his power, by declaring too large dividends, to sub¬ 
stantially ruin the company if lie chose to ? A. Hardly that; the 
actuary makes his computation in accordance with provisions laid 
down by the directors, and he reports to them; then they exercise 
their own judgment and make the dividend ; it is true, he may make 


533 


mistakes in reporting results to the board, which, if kept on, will 
injure the company; the actuary is a mere clerk, and makes his 
report to the directors. 

Q. If that were so, why, as a director, you having knowledge of 
the fact, why did you not ascertain the facts ? A. I had no knowl¬ 
edge ; the facts were these: on the calculation of the reserve at that 
time there was an item omitted by accident; the calculations were 
made by a person independent of myself, and when the report was 
made that item—I think it was some $60,000 of liability—was over¬ 
looked. 

Q. What was that liability ? A. It was a liability on certain re¬ 
versionary dividends. 

Q. What do you mean by that? A. Those are dividends which 
are left in the hands of the company as an addition to the face of the 
policy. 

Q, There were certain liabilities of the company to the policy¬ 
holders, which were added to the face of the policy, by the policy¬ 
holders allowing the dividends to stand, and that liability was not 
included ? A. It was computed, but a portion of it was omitted by 
accident; when the discovery was made it was reported at once 
had it been known the dividend would have been smaller, but it was 
not known either to the directors or myself; the omission being, 
made by the gentleman who made the calculation ; I discovered it, 
and called his attention to it, but it by no means left the company 
insolvent; the dividend was larger than it should have been, but it 
would have been rectified by the next surplus. 

Q. The difficulty would have been remedied by the next dividend ? 
A. Yes, sir. 

Bv Mr. Bliss : 

•/ 

Q. Was there not this difficulty subsequent to the calculation of 
the dividend that there was a large amount of loss; a sort of unusual 
mortality increase? A. I have no recollection of that time, and 
don’t think it is a fact. 

Q. You will find you are on record as having stated that as one 
of the reasons of the deficiency in the Widows and Orphans’ ? A. I 
think not; I think you are mistaken. 

Q. There were twenty-seven losses I think which was the average, 
but they ran up to $10,000 each, instead of being $2,600 or $2,700,. 
is not that so? A. No, sir. ; 

. ... i[ 7 

By Mr. Moak : 

Q. We will go back to the absorption of the Widows and Orphans’; 
that occurred in 1871 ? A. Yes, sir. 

Q. How soon was the company that absorbed that, itself absorbed 
in turn ? A. The name was changed, and in the latter part of 1872 
or early in 1873, I have forgotten which, the Reserve Mutual was 
absorbed by the Guardian. 

Q. And what became of the Guardian? A. The Guardian, in 
1874, was absorbed by the Universal. 


534 


Q. So that the whole four of them were wiped out in the course 
of three years or a little over ? A. In a little over. 

Q. What was the aggregate of the assets of those four companies ? 
A. The assets of the Reserve, as near as I recollect, were about 
$2,500,000, when they went into the Guardian; the Guardian, I 
think, had about $3,000,000; but my recollection is not very dis¬ 
tinct ; the report will show the exact figures. 

Q. That is only your recollection of it ? A. That is all. 

Q. What, if any thing, do you know about the system of declar¬ 
ing dividends in the Mutual ? A. I know all about it, sir; I was 
the actuary of the company. 

Q. What was there of it; there has been a good deal said about it 
and will you state what there was of it as you were the actuary; 
where did the trouble originate, or what was it; how did it culmi¬ 
nate ; commence at the commencement and give us the history of 
that ? A. I will do so if the committee desires it; the difference 
be: ween the officers of the Mutual Life and myself arose in this way : 
the charter of the company provides, as amended in March, 1851, 
that in case of the death of the part}*- whose life is insured, the 
amount estimated to be placed to his credit at the last striking of the 
balance sheet should be paid over to the person entitled to receive 
the same; that is, the dividends should be paid over, and the addi¬ 
tional dividends found to be due him at the next striking of the bal- 
ance should also be paid; that is what we call post-mortem divi¬ 
dends ; for example, if a man were to pay his premium on his policy 
anniversary, and were to die the next month, we would pay over to- 
his representatives the dividends declared to be due at the date of 
that payment, and by the next striking of a balance, there would be 
a further payment coming to him by reason of the amount he paid on 
his policy anniversary; in 1863, when the contribution plan of divi¬ 
dend surplus was adopted, I recollect there was a select committee 
appointed, consisting, I think, of the president, the two counsel of 
the company, the actuary, with Professors Bartlett, Wright and 
Anderson, as experts; that committee was reported to consider and 
report upon what are called post-mortem dividends; the counsel 
stated that they were required by the charter and must be paid, and 
the experts gave a written opinion as to the principles upon which 
they should be determined; the committee approved of their report, 
and the board adopted them, and it became a law of the company, 
and we prepared the particular amount each was to receive that year, 
ascertained in accordance with those principles; at each successive 
or particular month I prepared each policyholder’s dividend in accord¬ 
ance with the principle so laid down, up to and including February, 
1869; in February, 1869, Mr. Winston criticised some post-mortem 
dividends, and directed in future none such should be paid; in con¬ 
sequence of that order letters were addressed to the general agent 
and individual policyholders, stating that after that no post-mortem 
dividends were to be paid; none are paid ; and in the final settle¬ 
ment of death claims, between February and November, 1869, these 
amounts were withheld ; it was the duty of the actuary, and it had 
been from the time of my appointment until it was changed in 1870, 


535 


after this, to audit the receipts and payments of money in that com- 
pany, and I found by an examination, in the final settlement of the 
death claims that year, that these sums had been withheld ; I endeav¬ 
ored to persuade Mr. Winston that it was wrong, and had several 
conversations with him, but to no avail; it became my duty to cer¬ 
tify to the correctness of the statement ending the 1st of November, 
1869; I could not say the statement was correct; it was not correct; 
if I had said it was correct, I would have been guilty of a very seri¬ 
ous offense ; with a desire to avoid any conflict, and after consulta¬ 
tion with William Smith Brown, one of the trustees, I decided it 
was right and proper to modify that form of oath, which I did 
and instead of saying, I certify the account to be correct, I said I 
certify the items are in accordance with the entries on the books of 
the company, Mr. Winston took exception to the audit and per¬ 
emptorily ordered me to audit the account in the usual manner ; I 
said I could not do it, that it was not correct, and he ought not to 
ask me to do that which I thought was not correct; he insisted upon 
my doing so, with the threat that if I did not, he would find some 
one else for actuary who would audit it as correct; I still declined to 
do it and a statement was laid before the board of trustees and they 
directed that it should be laid upon the table for future examination; 
in the meantime Mr. Winston succeeded in getting my subordinate, 
Mr. Lawton, to audit the account as correct, which he did, it was 
never brought again so far as I know, in any of the trustees’ meet¬ 
ings ; then Mr. Winston succeeded in having a set of by-laws adopted 
by the company which took from the actuary the duty of 'auditing 
the receipts of the company and gave it to the book-keeper. 

Q. Well, that required him to audit his own accounts, didn’t it? 
A. Yes; and that time there was a committee of the directors of 
which the late Mr. Pierson was chairman, and Mr. Cole was a mem¬ 
ber, and they were requested to prepare a set of by-laws; that was 
done, but they were not acceptable to Mr. Winston, and he had a set 
made to suit himself; in that set the duty of auditing the receipts 
was taken from the actuary and given to the book-keeper; then Mr. 
Winston wrote a letter to the counsel of the company asking some 
information in regard to the distribution of the surplus, and the coun¬ 
sel insisted the then mode of distribution should be altered ; in 
accordance with that Mr. Winston requested Professor Bartlett to 
frame a method for the distribution of the surplus, which he did. 

Q. Who were the counsel ? A. Mr. Betts, Mr. Henry E. Davis, 
and Lucius Bobinson; I am not sure whether they all signed it; I 
have never learned that Mr. Winston had any authority from the 
trustees either to adopt a new system, to change the dividend system, 
or to ask experts to devise a plan for adoption by the company ; the 
company had previously adopted, and in their minutes stated, that 
in all future distributions the plan which they had used for years 
would be used ; the method of the professors was then brought down 
to the company. 

Q. Those counsel decided that a new plan should be adopted, did 
they? A. Yes; they brought down the new system which was 


536 


known all over the country as a system adopted by eminent mathe¬ 
maticians, but the trouble was that although they were experienced 
mathematicians they had had very little experience in life insurance 
matters, and owing to their want of experience, they submitted a 
plan that was entirely out of the question ; it was erroneous, and if 
persisted in would bring inevitable disaster to the company. 

Q. In what way ? A. It gave dividends twice over to certain 
policyholders ; it is a technical matter, and it will be tedious to ex¬ 
plain it; the counsel in reply to Mr. Winston’s letter, said the sur¬ 
plus of the company should be divided at the end of the fiscal year, 
that is up to the thirty-first of December, and no one should get any 
thing after that time ; the previous rule had been to give the divi¬ 
dends on the policy anniversaries, so if a man’s policy came due in 
July, he would get a dividend for the full year, but not payable until 
that time; that is the practice of all the companies in making divi¬ 
dends, and is the present practice with the Mutual Life ; it was 
adopted in 1863 ; after the report of the special committee, and after 
the statement of the counsel as to the proper way of dividing the 
dividend, it was decided on the ground of simplicity and conven¬ 
ience that the full annual dividends, and the method of dividing 
them adopted by every'company in the world so far as I know, was 
far preferable to the old system of dividing up to the first of Janua¬ 
ry, which was all very well when they gave a reversionary dividend, 
but when they came to give it so as to pay a portion of the annual 
premium, there was a manifesting convenience in the theory and 
practice 6f making a cash dividend payable to a man on the first day 
of January, when the man had nothing to pay at that time, how¬ 
ever, the professors brought down the formula and plan for carrying 
that into effect— 

Q. I don’t see how that led to the payment of the dividends twice ? 
A. Well, the dividends were made on the old plan up to December, 
1869, and a man whose policy was dated before that, had the full 
year’s surplus up to that time. 

Q. Then, if I understand you, it is this: that a man who took out 
his policy on the first day of January, was no better off, so far as 
dividends were concerned, than the man who took out one on the 
thirtieth day of December? A. Hot a bit; the plan of the pro¬ 
fessors, which was defective from want of knowledge of life insur¬ 
ance, but which was adopted, involved the payment of the full divi¬ 
dend for the year 1869 ; if a man’s policy was dated the thirtieth of 
September, he got the full surplus to which he was entitled ; by the 
plan of the professors, as adopted by the committee and board, it 
involved the payment of the full year’s dividend to a man who had 
been settled with before up to the anniversary, so it involved, as it 
were, a double payment in some cases ; besides that, there was some 
mathematical errors, which perhaps in themselves were not very im¬ 
portant; the insurance committee adopted that plan, and directed 
the actuary to carry it out, which he proceeded to do; but in the 
course of time, after two or three weeks, and after consultation with 
the professors, I found it would involve disaster to the company if it 
was persisted in, or, in other words, it was not safe; I had thus the 


537 


choice of two evils before me, either to appear to be insubordinate, 
and go against the rule the officers had adopted, or to point out the 
defect on the rise; I decide to point out the defect, 
which I did in a letter to the president, stating that after 
thorough examination I found the formula was defective and would 
inevitably lead to disaster; that letter was sent by Mr. Winston to 
the committee of professors appointed, and they looked over the 
matter carefully and found where their mistake was, and so reported 
to Mr. Winston; Mr. Winston and the directors ordered me to go 
ahead, which I did, and about a month after a letter was sent by the 
professors in which they stated that they went into a more careful 
examination and found their method was not so correct as they sup¬ 
posed, but at the same time suggesting the adoption of a method 
which was inclosed, which was entirely new, as they said, and so 
general as to apply to all cases that were likely to arise ; in other 
words, they found their first method, adopted by the company, was 
defective, and not as correct as they supposed, and asked permission 
to suggest a new one, and sent that new one down; the board of 
trustees met the next day at their stated meeting, and I think it was 
Mr. William E. Dodge, who said, here was a matter he did not un¬ 
derstand, and he did not think any member of the board understood, 
and he moved that three eminent actuaries, or rather one mathema¬ 
tician and two actuaries should be selected to examine into the whole 
thing and report to the board. 

Q. Who were they? A. Justice Bradley, of the Supreme Court 
of the United States, who was then an actuary, was one, Professor 
Elijah Wright of Boston, was another actuary, and Professor Uew- 
ton, of Yale College, was the mathematician ; they examined the 
matter, made a report and confirmed my statement, that the formula 
was not practical; they also stated that it was best to leave it to the 
actuary of the company to decide upon the formula of the surplus, 
and in accordance with the decision of the counsel they gave a report 
as to the method of ascertaining each member’s share of it; that 
report was adopted by the board at its full meeting, and the actuary 
was directed to carry out the recommendation in that report; that 
report really was that it is best to leave to the actuary the finding of 
a formula to decide the surplus, and they suggested a modification of 
my formula for finding each individual share; I wrote to Professor 
Wright, telling him what I had suggested, and he told me it was 
entirely correct, and the most expeditious of any formula that was 
correct; he stated that the expert’s formula was simply a review of 
my formula made necessary by the action of the counsel; this was in 
1870; I proceeded to get out the dividends in accordance with the 
recommendation of the committee of professors, and bear in mind the 
counsel’s opinion was that the dividends should be ascertained up to 
the first day of January, sharp, and nothing beyond that; I reported 
the entire surplus by the method which the professors'had modified 
to be, I think, $2,200,000: that year the round surplus up to the 
first of January, as made up, was about half of that sum, or say 
$10,000; Mr. Winston was dissatisfied with that, and there has 
been a good deal of confusion and disappointment at not receiving 


538 


the usual dividends, and the result was the committee ordered an 
addition of eighty per cent to the dividends so reported, which 
addition was made. 

Q. What was the effect of that ? A. The effect of that was to 
make a mistake in every single case; for instance, a man whose pol¬ 
icy was dated the first day of January and the other dated the thirty- 
first day of December, both of the same age, of the same amount, 
and precisely alike in every thing except the date, the one dated the 
first of January had $365 of surplus, which was all he was entitled 
to by any system or method, while the man whose policy was dated 
the thirty-first of December, had one dollar of earned dividend, and 
$364 of unearned dividend; the effect of increasing the dividend 
eighty per cent was to give the man who had $365 eighty per cent 
more; of course the man whose policy was dated the thirty-first of 
December got $1.80, but the other man got nearly $700; I have, in 
the handwriting of Mr. McCurdy, the reasons which he promised to 
put on record for my dissenting from it, which I claimed was a vio¬ 
lation of the principles of the charter, and a direct disregard of the 
decision of the referees; they found out the mistake after it was 
paid, and the actuary was instructed to adjust the error; I stated 
the only way to adjust that error was to get back the eighty per 
cent paid erroneously; that, of course, involved confusion; soon 
after that there was a publication of a private note of mine in regard 
to another company, in response to a courteous inquiry, and that led 
to the appointment of a committee without asking any explanation 
of it. 

Q. Well, that ended so far as the finances of the company were 
concerned, the difficulty and trouble between you and the company ? 
A. Yes, that ends it. 

By Mr. Husted : 

Q. I would like to know whether the Guardian company was not 
ruined by bad management ? A. I am not able to say, as I was not 
connected with it. 

Q. Were you not the actuary ? A. At one time I was consulting 
actuary; the Guardian company was technically deficient under the 
State standard, because the officers inserted among its assets a num¬ 
ber of premium notes on policies which were not in force; that was 
the reason of its being technically deficient, but I had not the 
of it. 

Q. Was that while Mr. Gill was in charge of it? A. No, sir; it 
occurred before Mr. Gill had charge of it. 

By Mr. Moak : 

Q. Who was to blame for that matter? A. Well, the officers of 
the company were to blame. 

Q. Well, who; there are so many of them, and we are told this 
matter is so technical that we can’t understand it; perhaps you will 
tell us who? A. The officers of the company at that time—it might 
have been the accumulation for a series of years, but it occurred 



539 


before I bad any thing to do with the company; at first, Dr. Peck- 
ham was president, and then Mr. William P. Hooker. 

Q. But the president would know, or was supposed to understand, 
every policy that run out, was he not ? A. No; that is not specially 
the duty of the president; it is the duty of the president to have a 
general supervision of the affairs of the company ; I don’t know who 
is to blame for it. 

Q. Is there not some particular person in all these companies 
whose duty it is to see when a policy lapses the premium note is 
wiped out? A. Certainly ; it should be, but it does not- necessarily 
devolve upon any particular person other than the person who is 
selected to perform that duty; it may be the secretary, or the actu¬ 
ary or a clerk. 

Q. Whose duty is it generally ? A. I should say it was the duty 
of the secretary. 

Q. Who was the secretary ? A. Mr. Geoghegan was secretary. 

Q. I thought Joe Coke was secretary ; A. I think he was the 
assistant secretary. 

Q. Which company did this occur in? A. In the Guardian; 
some years prior to my going into it 

Q. Now, then, these Tontine policies; what are they? A. The 
Tontine policies, as generally understood, are those in which the 
holders of policies agree among themselves, with the company, to 
leave the surplus and the reserve, in case of a lapse, in a common 
fund, to be enjoyed by those of their number who persevere in pay¬ 
ing the premiums from the commencement of their period down to 
its termination, and survive that length of time. 

Q. The short of it is, then, they agree on a certain period which 
they call the Tontine period, say ten, fifteen or twenty years ? A. 
Yes, sir. 

Q. And that agreemont was part of the policy ? A. Yes, sir. 

Q. And every man agrees that if he dies within that period he 
should take only the $5,000 for which he insures; supposing he 
insures to that amount ? A. That only. 

Q. And the reserves forfeited by reason of non-payment of pre¬ 
miums remaining in the Tontine fund to be divided among those 
who are holding the Tontine policies at the expiration of the period ? 
A. Yes, sir. 

Q. The insured gets the face of its policy if he pays up his pre¬ 
mium in case of death before the period expires? A. Yes, sir. 

Q. But he gets no surplus or dividend unless he remains in until 
the time of the Tontine period arrives ? A. Yes. 

Q. As I understand it the forfeited reserve and surplus which, 
under ordinary principles would be divided as dividends, belongs to 
the holders of policies in the Tontine class? A. Yes, sir. 

Q. Should it be put in as an asset of the company ? A. It is an 
asset; it is included in the assets of the company. 

Q. Should it be put in the general surplus of the company; 
assuming the company has got the Tontine plan and the ordinary life 
plan running along together should this Tontine surplus and ordinary 
surplus be put in together ? A. That would be governed by the form 


540 


of the policy, but as a matter of abstract equity I should say deci¬ 
dedly it should be counted as a liability to the policyholders. 

Q. Suppose for example, here is a company who has got $6,000,000 
of assets, a-lialf of that is forfeited reserve on Tontine policies, and 
suppose the company represent for instance, the whole amount of the 
reserve, that would not show the true state of the company would 
it? A. Not as a reserve sir, certainly. 

Q. What I mean to get at is this, if the company showed a gross 
surplus of $5,000,000, $2,500,000 of that would belong to the Ton¬ 
tine fund and would, in fact, be a liability of the company" instead 
of a general surplus ? A. It is rather difficult to explain that matter, 
because it is technical; it would be a surplus, certainly. 

Q. Well, belonging to the Tontine fund? A. Belonging exclu¬ 
sively to the holders of the Tontine policies, and in my judgment, it 
ought to be so reported. 

Q. Is it so reported by any company showing Tontine policies ? 
A. Tes. 

Q. What companies? A. I think the New York Life reported it 
so; I think the Equitable reported so last year, that is reported the 
sum ; I may be wrong, but I think it is so. 

Q. Don’t you think they reported it as far as their gross surplus ? 
A. My impression is, there was $1,000,000 reported as a surplus on 
the Tontine fund. 

Mr. Cowdin —It seems to me we have had enough Tontine infor¬ 
mation ; let us have facts. 

Mr. Moak —We have a company which has a large amount of 
Tontine policies, and the committee ought to know something about 
them, what they are and how the system works. 

The Chairman —This gentleman is an actuary, and may give us 
some information on that subject which we have not yet got. I 
prefer to have all the information on those points that we can get. 

By Mr. Moak : 

Q. Do you know of any case where large sums have been paid for 
stocks, much beyond the market value of the stocks, for the purpose 
of controlling companies, or obtaining the control of companies ? A. 
I do not, sir, know of any very large sums being paid. 

Q. Well, I say larger than the market value or the stock ; I don’t 
know that it might be very large, because a man might only want a 
little stock if he had nearly enough, but to get that little he might 
have to pay far beyond the market value of the stock? A. The only 
case that I know of, that I recollect at this moment, is in the case of 
the Phoenix Mutual, of Hartford. 

Q. What was that case ? A. I have no personal knowledge of 
that case; I only know it by reading. 


541 


By the Chairman : 

Q. Mr. Homans, I want to ask you a question or two; wliat do 
yon think of the amount of commissions paid to agents now; is it 
unreasonably large or not? A. I think it is very large, and wish it 
might he reduced. 

Q. Within what time has it been materially increased over former 
rates ? A. Well, during the last ten or twelve years it has increased 
considerably. 

Q. What were the former rates? A. They always varied in dif¬ 
ferent companies. 

Q. AV hat was the average formerly, say ten or fifteen years ago ? 
A. Well, the Mutual Life ten years ago paid, T think, ten per cent 
on the first premium and five percent on renewals; they have to pay 
more now. 

Q. Do you know what companies pay now ? A. I could not tell 
you without looking at the list. 

Q Do you know r how T many companies have gone out of existence? 
A. 1 could not tell you without looking at the list of companies. 

Q. They have decreased very largely, have they not? A. Yes; 
they have decreased very materially. 

Q. You mean the aggregate number now in existence is much 
smaller than it was ? A. I do. 

Q. What do you think of policies now having so large an amount 
of premiums on them? A. Well, that is necessary under the system 
of business adopted by nearly all the companies. 

Q. What is that system? A. It is the system known as the uni¬ 
form premium system; it is the average premium; the natural pre¬ 
mium would be that it should gradually increase as a man grows 
older, but the usual practice has been to charge a uniform premium 
through life, or as it is termed, a level premium. 

Q. What do you mean by a level premium ? A. An average 
premium; you go and insure for $10,000 and they charge you $200 
premium. 

Q. Which is more than is necessary? A. Yes; more than is 
necessary for the first year, or the first twenty years. 

Q. Can you tell me what the average duration of lives in compa¬ 
nies is ? A. The average duration of policies in companies is about 
seven years, only; that is in the American companies. 

Q. How much is it in the English companies; is it more ? A. 
Yes ; it is more. 

Q. How t much more? A. I don’t know r the average exactly. 

Q. I understand you to say the average existence of a policy in an 
American company is seven years? A. Yes. 

Q. Then the practical result of their taking a larger premium than 
necessary on the first twenty years of the life, and the fact that the 
duration of policies is only about seven years, is necessarily to accu¬ 
mulate a large reserve ? A. Yes. 

Q. How much would it be, for example, on a person at the age of 
tw r enty-five insuring himself for $1,000 ; wdiat would be the actually 


542 


necessary premium to carry it ? A. The ordinary premium to carry 
it as charged would be twenty dollars on a thousand. 

Q. Do you mean that that is the necessary amount ? A. No; 
that is the actual or uniform premium of companies on their lives. 

Q. The amount charged? A. Yes, sir; but the portion of the 
premium necessary for insurance and expenses and contingencies 
would probably be about eleven or twelve dollars, and eight or nine 
dollars is laid aside as reserve or liability, under that particular 
policy. 

Q. Which is cdled loading? A. No, sir. it is reserve; the differ¬ 
ence between a loading, as a merchant would call it, is a difference 
between the cost price of a piece of goods and the selling price; it 
is the margin put away for profit and expenses for insurance. 

By Mr. Lang : 

Q. Is the loading nine dollars or eleven dollars ? A. Neither. 

Q. Then what is it? A. It is composed of two parts, one is the 
provision for death claims, the other is the provision for loading; 
the loading would be about six dollars. 

Q. The average expenses five dollars ? A. No; the mortality is 
five dollars, and the reserve about nine dollars. 

Q. And that is necessary to make good his policy in case he lives 
twenty-five years longer than the average period of his life ? A. It 
is the average. 

By Mr. Husted : 

Q. Don’t 1 understand you that the loading covers all expenses ? 
A. Yes, sir; it ought to. 

Q* Sometimes there is a surplus, isn’t there ? A. Yes, sometimes. 

Q. And sometimes the company has run a little behind? A. Yes, 
sir. 

Q. It depends upon what the expense is ? A. It depends upon 
what the expense of getting the business is, and also the expense of 
conducting the business. 

Q. The reserve is not necessary for the first twenty years of the 
insurance of a man’s life ? A. It is necessary under the uniform 
premium list; it has nothing to do with the risk at all except to form 
a fund for the reserve of the company; it is a fund that accumulates 
and might as well be accumulated in the savings bank as in the 
insurance company. 

Q. For the benefit of the insured? A. Yes, sir; and the com¬ 
pany makes up the deficiency ; for instance, if the insurance is 
$1,000 and there is $300 reserve, they pay over the $300 in the 
treasury and make up the balance of $700. 

Q. Don’t they charge any thing extra for the trouble of carrying 
it, as it were? A No, sir. 

Q. What is the necessity of a reserve if the experience of the com 
pany is that men do not remain in for seven years ? A. Some of 
them will remain in until death, and the reserve is necessary in that 
case. 


543 


Q. I thought you said the experience of life insurance men was 
they did not remain in for seven years? A. True; but they never 
make calculations for any quantity of policies dropping out; they do 
drop out though, and the companies make a profit; but if it is for¬ 
feited to the company no matter whatever profit it may be there is 
always a certain odium attaching to the matter which makes it all 
the more difficult to get business; that is one of the reasons it cost 
so much to get insurance; if the companies would adopt a just and 
equitable plan, the cost of getting business ought to be very much 
reduced. 

Q. Can you tell what proportion of the policies are kept up during 
life ? A. All of the statistics which I have seen, that are reliable, 
put it that one policy in ten matures by death, and the other nine 
mature by causes other than death. 

By Mr. Lang : 

Q. What are those causes; forfeitures ? A. That is forfeitures; 
certainly that embraces all. 

By the Chairman : 

Q. Can you tell what proportion remains in force until the age of 
sixty ? A. No ; without looking over the specifications which are 
very difficult to carry in one’s head; I never make an attempt to 
carry statistics if I can help it; I try to find out where I can get at 
them. 

By Mr. Skinner: 

Q. Suppose people were to do their own soliciting, and that those 
people were to go and insure themselves rather than wait for the 
agents to come to them, what difference would it make in companies ? 
A. It would make a vast difference in favor of the company. 

By Mr. Cowdin : 

Q. But not in favor of the insured? A. Why, certainly they 
would get the benefit of it; the gentleman asked me if the policy¬ 
holders were to come in and get their own insurance whether it 
would make a difference; if they all came in it would of course 
make a difference. 

By Mr. Husted : 

Q. If that system were pursued do you think there would be 
much life insurance done ? A. No, sir; I think agents are necessary 
evils. 

By Mr. Skinner : 

Q. Can you give us an idea of what the effect of that would be ? 
A. Well, there are companies which have never paid any commission 
at all; the Equitable of London, is a case in point; this company has 


544 


a reserve of 11,000,000 pounds sterling, which is equal to $55,000,- 
000; but it was a company of very small growth, and they had to 
wait for years before they arrived at that stage. 

By the Chairman : 

Q. If an insurer has been connected with the company for five 
years, and then makes a defauU, a certain reserve has accumulated at 
that time, has it not? A. Yes, sir. 

Q. Is it more profitable that the company should have it forfeited 
for their benefit, or that he should continue his payment into the 
company for the time his policy runs? A. That is a question that is 
very difficult to answer; I think, in answer to your question, if 
there had been no lapses—if every man had paid his premium until 
he died—the companies would have done much more than they have 
done ; and for this reason, particularly, that the odium attached to 
the forfeiture of so many policies has made it very difficult to get 
business, so that it really costs more than it is worth to get new busi¬ 
ness ; there is no company in the world that is getting new business 
at a profit. 

Q. What-is the difficulty in having a premium fixed year by year ? 
A. That, I think, is the proper plan to pay for what you get; to 
buy your policy as you go, just as you would your dry-goods or 
groceries, and let the cost each year be fixed by the market value of 
the commodity. 

Q. That is the principle of the American Popular, is it not? 
A. Ho, sir ; it is the system adopted by the Provident Savings Com¬ 
pany. 

Q. Under that system there would be no necessity for a large 
accumulation, then ? A. Hot any more than there is for a fire com¬ 
pany. 

Q. The system you speak of would be the same as fire insurance ? 
A. Yes ; it would be like a building which every year becomes more 
and more hazardous, and a higher rate is charged for insuring it. 

* 

By Mr. Htjsted : 

Q. Those policies run out every year, don’t they? A. Well, the 
premium is for a year, but the policy is for life, and it is at the option 
of the insured to renew his policy at a little higher price each year. 

By Mr. Moak : 

Q. It is a policy for life, with an increased premium each year up 
to the time of death, or is it simply a premium on one year that he 
paid ? A. It is a policy for his whole life, and each premium is ad¬ 
justed according to the age of the person insuring. 

By Mr. Htjsted : 

Q. If after three years’ payment, when the fourth payment becomes 
due, the party concludes he will not again insure, do you pay him 
any thing for his policy; I mean do you pay him any thing for his 
reserve ? A. Ho, sir ; he has no reserve ; he has used it all up; he 


545 


got what he paid for it; you don’t get a surrender value on a fire 
insurance policy, and our policies are framed on precisely the same 
principle: he knows just what he is going to pay each year. 

Q. If he lives until he is ninety, will he be apt to keep up his pol¬ 
icy ? A. If he lives to he ninety years old, he will have to pay so 
much that he probably will not keep up his policy; if a man has a 
powder magazine in his house, he probably would not get a fire in¬ 
surance. 

Q. 1 et they do have them ? A. Yes; but they pay a premium 
in proportion. 

Q. Then you don't provide for a surrender value, and your poli¬ 
cies have no condition of that sort in them ? A. No, sir; the sur¬ 
render value is for the return of the portion of the reserve ; and as 
there is no reserve to return, there can be no surrender value. 

Q. What is the practice of ordinary companies in regard to sur¬ 
render values—I mean what is their usual system? A. All ordinary 

«/ V 

companies of good standing make it a practice to pay surrender 
values either in the form of new insurance or in cash; but in my 
judgment it is difficult to decide what the surrender value should be, 
and they should be left entirely as a matter of grace by the company ; 
they may be just as small or just as large as they choose, or as they 
think they can afford to give. 

Q. What is the objection to their paying the entire reserve ? A. 
Why the objection is, if that were done, the sound lives might take 
advantage of it, leaving the company with impaired lives, which 
would be inevitable ruin ; and therefore the companies exact such a 
charge from the policyholder on his surrender, as will not only act as 
a penalty but keep them safe ; but the extent of that charge is a 
matter of opinion on which no two actuaries or companies will agree ; 
but in regard to paid-up insurance on the surrender of a policy, it is 
a very different thing. 

Q. Well, what should be the rule there ? A. The rule is a man 
shall have all the insurance he has paid for. 

By Mr. Lang : 

Q. Have you examined the provisions of the bill reported from 
this committee to the House ? A. No, sir; the Massachusetts law, 
which gives eighty per cent on any policy as a single payment to 
continue the policy, in that respect would be something more than 
just; I would suggest that if the premium is not paid when it is 
due, that the insurance should not lapse by reason of that non¬ 
payment, but insurance for a reduced amount should be given 
to the individual; in other words the policy should be 
continued for a reduced amount, the reserve on the poli¬ 
cies should be credited to the individuals as suggested, but in this 
manner; it should be credited to him payable at his death or on the 
maturity of the policy; the company has no right to pay it out and 
is not called upon to do so, yet each man’s reserve belongs to him¬ 
self and no one else has a right to it; I would use the interest that 
accrues on that reserve to pay the premium on a certain amount of 


546 


insurance which that interest will purchase, and which will add to 
the amount to be paid him at his death, and at the time of his death 
it should be paid over to the party entitled to receive it, not only the 
reserve on the original policies, but also the amount of insurance on 
the new policy which the interest had purchased should also be paid 
over; in that case there would be no discrimination either for or 
against the policyholders. 

By Mr. Husted : 

Q. You say the accumulation belongs to the individual; does not 
the grand accumulation belong to all of them ; is it not used as a 
general reserve fund for the benefit of all parties insured in that 
company \ A. If it is, it ought not to be so, any more than a reserve 
in a savings bank belonging to all depositors. 

Q. Does not each man insured, really insure every other man ? 
A. Yes, and he pays the insurance as part of his premium, but the 
reserve is entirely distinct and has nothing to do with it; it is 
deposited for accumulation and if the Mutual Life Insurance Com¬ 
pany chose to do so, it might put the reserve on all the Detroit poli¬ 
cies in Detroit, and let them take the chance of the solvency of the 
savings bank there and get the benefit of the large interests which 
they pay. 

By Mr. Lang : 

Q. You spoke of a man paying twenty dollars; supposing he pays 
an annual premium of twenty dollars, you spoke of this, six dollars 
would be for loading, five dollars for mortality and nine dollars for 
reserve, what would the mortality tables show, if the actual death 
rate a man must pay to insure himself for that amount, $1,000 ? A. 
Five dollars. 

Q. Then to secure for himself such an insurance, at his age, he pays 
twenty dollars and gets just five dollars worth ? A. Of insurance ; 
yes. 

Q. In other words, on the mutual plan, without expense, five 
dollars would pay for just as much insurance as he gets now by pay¬ 
ing twenty dollars ? A. Certainly. 

Q. You say five dollars actually pays for the benefits which the 
man actually gets in insurance for which he now has to pay twenty 
dollars, or in other words, which the present system requires him to 
pay ? A. Yes. 

Q. He would get then just as much as twenty dollars now buys 
for him ? A. Yes. 


By Mr. Husted : 

Q. In my town a man was insured for $50,000; he paid $5,000 
and died, and of course his family was paid the $50,000; now I 
want to know where that money came from, if it did not come from 
other people’s reserve ? A. Well, it did not come out of their 
reserves. 


547 


Q. Then where did it come from ? A. It came from their contri¬ 
butions to the death claims that year. 

Q. It did not come from the reserve? A. No, sir; and if it did 
the trustees were recreant to their trust. 

Q.. llien if your theory be correct in the case of the lapse of a 
policy, why is a man not entitled to go to the company and demand 
his reserve ( A. Because he has made a contract which does not 
give him that right. 

Q. Then why do you suggest that the reserve shall he kept until 
the death of the policyholder, and the interest upon it shall be used 
tor purchasing additional insurance, all of which shall be paid to his 
family, why, on the contrary, would you not suggest that in the case 
of a lapse he should have the right to go and demand the reserve? 
A, I think each company should set up in its contract the cash value 
the policyholder could take when he goes out; I am speaking now 
of an act to be passed by the Legislature, and it is very difficult to 
determine what portion of the reserve should be taken from each 
company, and for this reason ; the Mutual Life can afford to pay a 
much larger sum than the Provident Savings could. 

Q. 1 on say the reserve is his own property? A. Yes. 

Q. Then if it is his own property, why should we not provide 
that upon the lapsing of a policy the party can go and demand that 
reserve ? A. Well, he can’t take the whole of it. 

Q. 1 et you say it belongs to him ? A. Yes, sir. 

Q. Then why can’t he demand it ? A. Because if he could the 
company may be left with a large number of sick men, and the 
healthy men would go out; consequently that should be left there. 

Q. Then his reserve is left to take charge of the sick men ? A. 
No, but it gives him the option against the company if you pass 
such a measure as that. 

Q. Yet you say it is his? A. Yes, sir. 


By the Chairman : 

Q. While it belongs to him, as I understand you, you think the 
company should not pay it to him until his death ? A. That is it; 
let me illustrate this matter, and I think I can make it very simple: 
suppose you and I should have been insured in the Mutual Life at 
the same age, paying the same premium, and on the same day, and 
we should go into the Mutual Life together in sound health, and 1 
should be a sick man and you should be a sound man, and you, the 
sound man, should say to Mr. Winston, Mr. Winston, I have decided 
not to continue my premium and would like to withdraw my full 
reserve; I should say I object to that, because if you allow the well 
men to go out and take their reserve and all that belongs to them, 
it impairs my security ; Mr. Winston will say, Mr. Homans, the sur¬ 
render values are properly computed, although I think they are not, 
and I have arranged with Mr. Moak that I have taken from his 
reserve a sum, which deposited for you will keep you equally good, 
and if he choose to make it up in kind he can do so. 

Q. The issue I make with you is this ; when I put the question to 
35 


548 


you whe f her or not the grand total of the reserve should be consid¬ 
ered as that portion of the general fund which should contribute to 
the death claims, you said no, because you say the company should 
not touch any man’s reserve, as it is his own property ? A. Certainly, 
and I say it should not be taken to pay any man’s death claims ex¬ 
cept this one man. 

By Mr. Skinner : 

Q. Why is it not kept as well for the sick man as for the well 
man ? A. Because it belongs to the individual himself but he could 
not take it out under the contract he signed to the company. 

By Mr. Husted : 

Q. Then what good is it in there if the company can’t use it ? A. 
It goes to form a fund as a security. 

Q. Well, how can it be a security if it is not used ? A. Because 
a certain portion of the amount is necessary for all liabilities; if the 
Mutual Life Insurance Company had all its insurance on ten men 
and one died the company would be ruined, but where the insurance 
is on 100,000 men one of them might die and it would be a matter 
of little importance to anybody except himself; if the Legislature 
were to say to the Mutual Life to-day you must wind up and be dis¬ 
solved, then every man would get his reserve without deduction, but 
if they allow a certain portion to go out and make the option as 
against the company, then a deduction is necessary ; it is a sort of 
contingent fund. 

Q. You admit then there are circumstances under which the reserve 
ought to be used? A. No, I do not; it ought to be retained as a 
matter of precaution; there are companies which give the whole 
reserve on demand, and the Equitable of London is one of them. 

Q. Is it a prosperous company? A. The most prosperous com¬ 
pany ever formed, but they distribute their surplus once in ten years, 
and their surplus is so great that they make more out of surrenders 
than our American companies do ; I think each company should be 
allowed to decide what they will offer, and they are safe to do it; 
while it should be left to each company to decide what they will pay 
in cash for the surrender of a policy, with regard to insurance it is a 
very different thing; they really insure a man by in fact selling in¬ 
surance for money, and if the Legislature interferes at all it should 
see that they get all the insurance paid for, as it occurs to me the 
plan I suggested meets this exactly ; it gives to every man every 
dollar of insurance he has paid for, and if he violates any of the con¬ 
ditions of the policy he loses the right to the full amount of insur¬ 
ance, and the company is required to hold the reserve until it is 
matured, and allow him interest on the same at four and a-half per 
cent, not in cash, but in kind, to use it to buy a certain amount of 
insurance, which the interest will buy annually, and which will 
inure to his benefit; when the man dies it is paid over to him; no 
matter what policies the company may issue or what the dividends 
are, under that system full justice is done. 


549 


By the Chairman : 

. Q* B | s n °t the practice of companies in giving a surrender value 
for a policy, to estimate a life at its maximum length rather than the 

average ? A. Oh, yes; they assume that that man is better than the 
other is. 

Q. But he does not get what the average of life would entitle him 
to? A. No. 

Bv Mr. Moody : 

•/ 

Q. Why may not life insurance companies be arranged so that if 
a man sees fit to cancel lfis policy at any time he may receive such a 
return ? A. I think every company should put in its contract what 
they will allow. 

Q. The same as fire insurance companies ? A. I think so, sir. 

By Mr. Lang : 

Q. It has been suggested that that will affect any company un¬ 
favorably ; what is your opinion of that ? A. It has not had that 
effect in one company I know; it depends entirely upon the contract 
that is made with the policyholders. 

Q. Which company do you mean ? A. The Equitable Life of 
London gives full surrender values on life policies m all cases. 

Q. But what companies in this country? A. The Brooklyn Life 
has a cash surrender value noted in all its contracts. 

Q. Is that the only one? A. I think it is the only one that has 
it in the policy contract. 


By Mr. Hustei) : 

Q. The Mutual Life has it in its endowments ? A. The Mutual 
Life has not a standard by which they will compute the surrender 
value. 

Q. But they give it in writing ? A. No, sir ; I think not. 

Q. I have it in a policy of my own ? A. Possibly it may be in 
recent policies, but it used not to be; I know a case of a gentleman 
in Newark who last year was informed that the surrender value of 
his policy would be $1,300, and he went there last March and was 
told that the value was $900; if they chose they could make the 
change every Monday morning. 

Q. But they can’t do it when it is put in a policy? A. I don’t 
think that it is in a policy that they will pay a cash value; it may be a 
memorandum on the back consisting of so many figures. 

. Well, I say it states that after two years, on surrender of the 
policy, I can receive so much, three years, so much, four years so 
much; it is a ten-year endowment, payable, of course, in ten annual 
payments? A. You are wrong, sir; it is not in money. 

Q. No, I think it is that I should have a paid-up policy? A. Yes, 
that I admit; they say that they will give you a paid-up policy, but 
there is no policy ever issued by the Mutual Life which has on its 
face cash surrender values. 


550 


Q. The Provident Savings Company closes a man out every year, 
doesn’t it? A. No, sir; it does not; we shall he glad to insure you 
every year, if you pay your money ; you may be in our company 
twenty-live years and you will not pay as much as you do now in an 
ordinary policy in a mutual company. 

Q. But you will not give us a cash surrender value ? A. No, 
because you have lived it up. 

Q. But I thought you said you do give a cash value? A. Yes, sir, 
on old policies, but not on the new ones. 

Bv the Chairman : 

*/ 

Q. What tables do you use? A. The American experience- 
table. 

Q. That is founded on the experience of every company, is it not? 
A. Yes, sir. 

Q. Well, is it not their experience that the lives which go out are 
the better lives, while the impaired ones stay in ? A. It is to a great 
extent, but not to as great extent as is generally supposed. 

Q. It is assumed that that is largely the case? A. Yes, sir: I 
know it. 

Q. Therefore, the experience of any one company is not as good 
as the average of lives which are not in the companies ? A. No, 
sir; it would not be. 

Q. And therefore, by basing their premiums on a table of their 
own experience, they are not giving to the insured such advantages 
as if they took the average of lives generally ? A. No, sir. 

Q. That is the fact, then, in the use of those tables? A. Yes, 
sir. 

Q. It operates to the disadvantage of the insured to that extent ? 
A. No; I don’t think it does, sir. 

Q. If they use a rule which does not show the actual facts of the 
experience of ordinary lives, it must operate to the disadvantage of 
the insured to that extent, must it not; it is the experience of lives 
in every company, that the more impaired lives remain while the 
better lives go out, do they not ? A. No, sir; the general experi¬ 
ence table used—the American experience table—is formed by the 
experience of the mutual benefit companies, the Massachusetts 
department, and it is the best treatise on mortality of American 
lives extant. 

Q. Well, don’t they allow for more mortality beyond what that 
experience table shows ? A. The premium tables of the companies 
are founded on that experience table. 

Q. But don’t they take into consideration a mortality which may 
not occur absolutely in a thousand years? A. Well, they have to 
make themselves safe. 

Q. And that makes the insurance cost more, does it not ? A. Yes, 
By Mr. Bliss : 

Q. When you were examined in reference to this matter of post¬ 
mortem dividends before the Superintendent of Insurance, in 1871, 


551 


at an examination lie then held, did you, on that occasion, say : “I 
will say to the Superintendent that I would be very unfortunate in 
my intention if any thing I had said would be construed to insinuate 
that Mr. Winston had acted in this matter in any other way than 
conscientiously?” A. Well, 1 don’t think I have said any thing to 
the contrary to this committee; I think, in issuing the order, he 
violated the charter, but I don’t think he did it intentionally. 

Q. Are you not aware that Mr Winston stated under oath that 
you were mistaken in supposing he gave the order ? A. I have 
copies of the letters to all the general agents which show I am not 
mistaken. 

Q. Did not Mr. Winston state that he sent an order to you by a 
messenger, in reference to a policy of one Hopkins, of Baltimore, 
and the order was given in such a way by the messenger as to lead 
you to think it was general ? A. No, sir. 

Q. u 1 said to the assistant actuary, don’t you pay these post¬ 
mortem dividends until we have an opportunity to bring it before 
the committee, and here is the matter at issue between Mr. Homans 
and the assistant actuary; the assistant actuary told me he told Mr. 
Homans; Mr. Homans says he did not; two days after I left for 
California and was gone for three months ; I came back and found 
that some of our friends here had raised a terrible storm during my 
absence, so much so I was obliged to attend to the affairs of the 
company without attending to the current business, and this subject 
came up; then Mr. ILomans went to Europe and was gone a couple 
of months, and came back again in autumn; ” did he not so testify 
before Mr. Miller? A. I never saw that testimony before; since 
that question was raised in an official letter in 1873, over the signa¬ 
ture of Mr. Stewart, the secretary, Mr. Winston states that the 
executive officers thought Mr. Homans’ calculations were wrong, 
and then the order was issued that the post-mortems should be 
stopped, but the letters showing the final settlement of the death 
claims show that for nine months the post-mortem dividends were 
withheld. 

Q. He says after he came home and you went to Europe, the storm 
was raised, and you said Mr. Winston did it conscientiously? A. I 
did not, sir; I said he had no intention of violating the charter, but 
he certainly did it. 

Q. Here is what you say : “ 1 will say to the superintendent that 
I would be very unfortunate in my intention if any thing I had said 
would be construed to insinuate that Mr. Winston had acted in this 
matter in any other way than conscientiously.” A, That was not 
my intention; I have no doubt everything was done conscientiously, 
that was in giving the order. 

By Mr. Moak. 

Q. At the time the Widows and Orphans’ was transferred, was a 
man by the name of Grannis connected with it ? A. He was secre¬ 
tary of the Widows and Orphans’ at the time of the transfer. 

Q. Where is he now ? A. He is second vice-president of the 
Mutual Life. 


552 


By Mr. Bliss : 

Q. Is it not a fact that Mr. McCurdy called the directors together 
and said he perceived there was an impairment of the capital, and 
that he had a proposition by which the stock could be purchased ; 
that he had it referred to a committee, of which Mr. Babcock was 
chairman, and the directors adjourned; and they brought in a report 
stating that they insisted the whole stock should be bought, and they 
satisfied themselves that the policyholders would be properly treated ?■ 
A. I never knew of such a report, and don’t think there was any. 

Mr. Bliss —I have it in my possession. 

By Mr. Lang : 

Q. I want to see whether you understand correctly what I asked # 
you ; the question is, whether the mortality tables show that, if 1,000 
men insure for $1,000 each, the cash premium fixed by the company 
being twenty dollars each, that these men could insure each other 
by the payment of five dollars each, and it would insure at death. 
$5,000 ? A. If there were no expenses. 

Q. All the rest is profit ? A. JNTo ; if the twenty dollars is to b& 
continued uniformly through life, there will be a time come when 
the twenty dollars will not pay more than the death claim itself, and 
they must have an accumulation from each of the premiums, so as to- 
diminish the risk on the policies; if they have $500, the risk is only 
$500; while it will take twenty dollars at an advanced age, it will 
only take ten dollars at first. 

Q. Do you mean it will cost more than five dollars ? A. As he 
grows older. 

Q. Assuming the man is twenty years old ? A. Then the five 
dollars will pay it. 

Joseph F. Knapp sworn. 

Examined by Mr. Moak : 

Q. Are you in any way connected with the Metropolitan Life In¬ 
surance Company? A. Yes, sir. 

Q. What is the exact name of it ? A. The Metropolitan Life In¬ 
surance Company. 

Q How long have you been connected with it? A. Since 1871. 

Q. In what capacity ? A. As president. 

Q. Prior to that time, had you been connected with it in any 
way ? A. Yes, sir; as one of the board of directors. 

Q. In other way ? A. As a stockholder, of course. 

Q. I mean did you hold any office in it ? A. Ho, sir. 

Q. Since you became connected with that company what has been; 
your regular salary ? A. Six thousand dollars; no, I beg your pardon ; 
it commenced at $4,500, was then made $5,000 and then $6,000. 

Q. How long did it continue at $4,500 ? A. It was $4,500 the 
first year; $5,000 the second year and $6,000 after that. 

Q. Since you have been connected with the company, have you 


553 


received any bonus, and if so, what ? A. I have received a commis¬ 
sion on the net receipts of the company. 

Q. What commissions ? A. Do you mean what amount? 

Q. At what per cent was it computed? A. At one per cent after 
all the expenses were paid. 

Q. How much commission were you paid the first year after you 
went into the company ? A. How, you ask me too much. 

Q. You have some general idea, I suppose? A. If you want 
about the average compensation I have received I can give you that 
because it has been calculated; it is about $0,300 a year on the av¬ 
erage ; that is, the average salary since I have been president, has 
been about $9,300. 

Q. How much commission did you receive last year? A. There 
was paid to me last year $8,300. 

Q. Commissions? A. Yes, sir; it was a little over $8,300; it 
was $8,334 I think, somewhere about there. 

Q. How much the previous year ? A. Between $7,000 and $8,000; 
I cannot tell the exact amount. 

Q. How much has it been in the aggregate, the amount you have 
received ? A. All I can say is, the average compensation I have re¬ 
ceived since I have been president of the company is about $9,300 ; 
that would show, saying the salary was about an average of $6,000, 
commissions of about $3,300 or $3,400. 

Q. Well, it would average that, would it? A. Yes. 

Q. But the commissions would have been more than that ? A. You 
must bear in mind that for the first two or three years there were 
no commissions paid ; there was a contract made between me and 
the company to pay me quite large commissions, but I was too con¬ 
scientious to take it. 

Q. When did that occur that you were too conscientious to take it; 
before or after the contract ? A. I made the contract before I went 
into the company, and did it deliberately when I went in, and made 
up my mind a man who would start into a company in the condition 
that was in, and endeavor to work it out, ought to receive a large 
compensation, and was entitled to it. 

Q. Then why didn’t you take it ? A. Because after I got into the 
company, 1 found it was necessary to leave all the money possible in 
the company for the benefit of the company. 

Q. How much was that contract for, or how much would your 
compensation amounted to as you contracted for? A. At that time? 

Q. During the whole time; supposing you had taken the whole 
amount you contracted for? A. That contract was never put in force. 

Q. I don’t understand you ? A. I told you one of the conditions 
that I made on entering that company was, that I should have a 
certain compensation and commission, and I did it deliberately, 
knowing just what I had to go through, but that contract was never 
put in force. 

Q. Well, I don’t understand the distinction you draw here? A. 
Well, I did not enforce the contract. 

Q. The contract was in existence, was it not? A. Ho, sir; it was 
not in existence, because I abrogated it by my own action. 


554 


Q. Suppose you should sue for it to-day, have you done any thing 
by which the amount of it could not be recovered? A. Yes; it is 
on the minutes of the board of directors that it was rescinded. 

Q. When did you make the contract ? A. I made the contract 
before I agreed to take the presidency of the company. 

Q. When was that? A. I told you it was in 1871. 

Q. When was it rescinded ? A. It was never put in force ; and 
rescinded about two years and a-lialf after it was made, by the action 
of the board of directors. 

Q. Then there were two years and a-lialf that the contract was in 
force, so far as the contract says any thing to the contrary ? A. Yes, 
sir. 


Q. And at the end of two years and a-lialf it was rescinded ? A. 
Yes, sir. 

Q. In what way ? A By the action of the board of directors. 

Q. With your consent? A. Yes, and at my request. 

Q. I will put the same question here I did before, whether this 
contract, so far as any action by yourself, or any action by the board 
of trustees or directors is concerned, was not in force for that two 
years and a-lialf? A. It was in force. 

Q. At the expiration of that period you say it was rescinded by 
the board of directors at your request ? A. Yes ; but not in conse¬ 
quence of my having taken any thing under the contract, but because 
the business would not permit of my taking that amount of compen¬ 
sation out of it. 

Q. What I want to get at is this: it was not rescinded before that 
time, and so far as any thing in that contract is concerned, there is 
nothing to prevent your setting up a claim for past services ? A. It 
was part of the contract that I could not get a cent. 

Q. That was part of the contract ? A. Yes, sir. 

Q. During that time had the company paid you any bonuses ? A. 
No, sir. 

Q. They had paid you nothing ? A. No, sir. 

Q. At the recision of the contract did they pay you any bonus ? 
A. No, sir. 

Q. I mean in no case? A. No, sir, in no case whatever. 

Q. When was the first bonus paid you ? A. It was paid the first 
year after that. 

Q. Well, that would make it about three years and a-lialf after you 
first became connected with the company? A. Yes, sir; let me 
understand that question. 

Q. The first bonus they paid, about a year after the recision of the 
contract, would make it three years and a-half after you became con¬ 
nected with the company, wouldn’t it ? A. Yes, sir. 

Q. Well, how much was the bonus ? A. I could not tell you; I 
have told you about what was the average. 

/ Q. Was it fixed at one per cent of the net receipts of the pre¬ 
vious year? A. Previous to the recision of the contract do you 
mean. 

Q. Previous to the giving of the bonus? A. Yes, sir. 

Q. Only that year? A. Yes, sir. 


555 


Q. And since that time the same per centage of the net receipts 
has been paid to yon ? A. Yes, sir. 

By Mr. Woodford : 

Q. This bonus of one per cent was on the net premium income of 
the company, was it not ? A. Yes; not on the interest receipts, but 
simply on the net premiums; I want that to be understood. 

By Mr. Moak : 

Q. That is the net premium received during the year? A. Yes, 
sir. 

Q. Or the preceding year rather? A. Yes, sir. 

Q. At the end of every year you take this per centage upon the 
net premium of the preceding year? A. Yes, sir. 

Q. Now, has any bonus, or lias any sum whatever, been paid to 
you on account of the return of that contract made to the company ? 
A. No, sir. 

Q. Received by you either directly or indirectly? A. No, sir. 

Q. Or by any member of your family ? A. No, sir. 

Q. Has any bonus been paid to you on account of any loans made 
by your company ? A. No, sir. 

Q. Either directly or indirectly ? A. No, sir. 

Q. Nor received by you either directly or indirectly ? A. No, 
sir. 

Q. Or by any member of your family? A. No, sir. 

Q. In any instance have you, when loans were applied for, stated 
to the party so applying that in order to obtain the loan it would be 
necessary for him to pay a bonus? A. No, sir; but I think I can see 
wdiat the inquiry is made for; a party has come to the office when we 
desire to place mortgages on deposit with the department, and we 
insist that the applicant shall pay all the expenses, and parties may 
ask what it will cost; Mr Hageman or myself will say, it is three 
per cent; the reason we have said that was because we are not satis¬ 
fied with the search of the department, and we have our own coun¬ 
sel ; our counsel here go over the mortgage first and make the search 
of the title, and have to be paid ; as you all know, he gets a very 
liberal compensation; but, any way, the counsel of the company has 
to be paid ; by a rule of the department, all mortgages put on trial have 
to pass through the hands of the counsel of the department, and he 
has to get his fees, and his fee has to be paid by the borrower also; 
the usual charge by the company is one per cent, and the counsel for 
the department receives one per cent; sc^ taking the services and 
expenditures all together, it will be about three per cent. 

Q. If I apply to the company for a loan, and you come to the 
conclusion you want to put that mortgage into the department, in 
the first place you would make me pay for the search of the title ? 
A. Yes, sir. 

Q. And your counsel would receive one per cent? A. Yes: he 
would be paid that. 


556 


Q. Then the department counsel would be paid one per cent ? A- 
Yes; that is the law. 

Q. Well, you state there is three per cent; each of the counsel 
receiye one per cent, which makes two ; where is the other one per 
cent ? A. I say, we tell the applicant he most pay all the expenses, 
and I suppose that they will be this much, say three per cent, and he 
must find out where the money goes to. 

Q After your counsel has been paid one per cent and the depart¬ 
ment one per cent, where does the other one per cent go to, I want 
to know ? A. There are two searches made, and they have to be 
paid for; the department ought to be satisfied with the company’s 
searches, in ray estimation, and then the expenses would not be one- 
half ; I can say that there are many mortgages which do not cost to 
exceed one and a-quarter per cent, and in many cases he does not get 
more than a-half of one per cent. 

Q. What is the time for which you make the mortgages ? A. One 
year; but we never call them in where the security is good and the 
interest paid. 

Q. Are you president of a company called the Major & Knapp 
Printing Company ? A. I am a stockholder in it, but not the presi¬ 
dent. 

Q. Has that company done printing for your association? A. Yes, 
sir. 

Q. To what extent ? A About $3,000 a year; it may have gone up 
to $4,000, but not to exceed that; so far as that company is concern¬ 
ed, I have stated to the board of directors, and indeed to any one, 
that if they can get their printing done for less than the Major & 
Knapp Company does it, they can do so ; but I know that can’t be 
done ; I have seen that the charges should be made low for any work 
done for the company, because I expected such remarks to be made 
on account of my connection with it; the printing for our company 
is done twenty-five per cent lower than the charges ot the Major & 
Knapp Company to any other institution. 

Q. You say it will not exceed three or four thousand dollars a year ? 
A. T cannot speak from positive knowledge, but I judge from look¬ 
ing over the bills; last year there was about $3,300 worth done; pre¬ 
vious to that I cannot state; I don’t think it has ever been over 
$4,000. 

By Mr. Weiant : 

Q. That is not an incorporated company, is it ? A. Yes, sir ; it is 
incorporated under the general manufacturing law. 

Q. Has your insurance company ever loaned any money to the 
corporation? A. No, sir f nor to any institution. 

Q. Nor bought any of their stocks? A. No, sir; we have no 
money loaned except on mortgage, and United States and State 
stock. 

Q. You think it better to loan on those securities than on stocks 
of corporations? A. Well, there was a bank went up the other day 
in which one of the eastern companies had $45,000 ; you can draw 
your own conclusions from that. 


557 


Q. You think it will be better not to do so? A. Yes; I think the 
law as it stands is a very good law. 

By Mr. Moak : 

Q. Are any loans made by your company upon the property of the 
officers of the company ? A- Yes, sir. 

Q. To what extent ? A. Do you mean me, personally. 

Q. No, I don't mean you, personally, but to any officers ? A. 
There is a loan made to Mr. Hageman, and also to myself. 

Q. What is it as to yourself ? A. Thirty thousand dollars. 

Q. On real estate? A. Yes; real estate improved. 

Q. How was the loan made? A. In the first place we were requi¬ 
red, m order to do business in Canada, to deposit a certain amount 
of money there; it was absolutely necessary to deposit $50,000 at 
once,, and the rules of the department are so strict that it would be 
utterly impossible to take the mortgages we have on hand and get 
the affidavits from the parties in time to make the deposits; we 
wanted to make it in a certain time, and I knew I could place a 
mortgage on my own property and get the affidavits necessary, and 
get it there in the time required ; that mortgage was placed on file 
in the department, and United States bonds withdrawn and put into 
Canada; this property has gone through the ordinary routine of the 
department examination, was regularly appraised by two appraisers, 
and examined by two counsel. 

Q. The short of it was, you mortgaged your own property for the 
purpose of getting assets to deposit in Canada, for the purpose of 
enabling your company to do business there ? A. Do you mean to 
say by that that I loaned the company the mortgage ? 

Q. You mortgaged your own property for the purpose of getting 
money to buy the securities, I suppose ? 

Mr. Woodford — No; don’t be mistaken in that; the company 
wanted to put $50,000 of United States bonds in Canada; they had 
on deposit, with the Insurance Department here at Albany, $50,000 
in United States bonds; they could not get those bonds or with¬ 
draw them from the department here without replacing them by 
mortgages or some such securities as the department would accept; 
they had the money in New York in the company’s treasury; they 
did not want to buy United States bonds at the time because the 
bonds were too high ; they preferred to take what they had, so Mr 
Knapp borrowed from the company upon the house and grounds in 
which he lives, which is a property worth $80,000 ; he borrowed 
$30,000, taking the money from the company, and that mortgage ; 
the property has been appraised by the appraisers of the Insurance 
Department; that mortgage for $30,000 was deposited with the de¬ 
partment here, and immediately on the deposit of the mortgage the 
department gave back $30,000 in United States bonds, which amount 
in turn was placed upon deposit in Canada. 


558 


By Mr. Cowdin : 

Q. Did you take from the company $30,000 in money ? A. I did. 

By Mr. Moak : 

Q. That is all perfectly straight; I see no objection to that; how 
was it as to the vice-president; you said he had a loan, I think ? A. 
He had a loan of $7,000 on his house. 

Q. How much is that house worth ? A. Well, at the time the 
loan was made it cost him $16,000 ; and I suppose, to-day, it is worth 
$13,500 or $13,000; that was the actual money expended on the 
house, and what he paid for it. 

Q- You hold as collateral tire insurance policies, I presume? A. 
Yes, on every loan we make. 

Bv Mr. Weiant: 

•j 

Q. When did you give the bond and mortgage to the company? 
A. Which—the $30,000 ? 

Q. Yes? A. I can only guess at it; I think we have been in 
Canada three years ; it must be between three and four years. 

Q. What is a fair value of that property now? A. Well, I sup¬ 
pose the Governor put it rather high; I will be modest and call it 
$65,000 ; I was offered four years ago $80,000 for it. 

Q. Is it store property, business property, dwellings, or what ? 
A. No, it is a dwelling and live lots of ground, on the corner of 
Bedford avenue and Ross street; it is 100 feet front by 105 feet 
deep; it is a large double brown stone house. 

Q. Is yours a stock company ? A. Yes, sir. 

Q. What is its capital stock? A. Two hundred thousand dollars. 

Q. How much of the stock do you own ? A. Sixty-nine thousand 
five hundred dollars. 

Q. And do any other of the officers of the company own any 
amount of it ? A. No, sir. 

Q. No other officer of the company owns any of the stock? A. 
No, sir. 

Q. How much is in your name? A. Nineteen thousand five 
hundred dollars. 

Q. Do you own some for any other parties ? A. I do not hold it 
for other persons ; I own the stock, but it is in other persons’ names 
on the books. 

By Mr. Moak : 

Q. Has some of the capital of your company been retired ? A. 
No, sir. 

Q. Not any of it ? A. Not a cent. 

By Mr. Weiant: 

Q. What is the least number of persons who hold a majority of 
the stock of the company, taking those who hold the largest amount ? 


559 


A. I can only guess at it; I should say somewhere about fifteen or 
sixteen ; it may be more than that, but I don’t think it is less. 

By Mr. Moak : 

Q. Has your company any association with any other company—► 
a German company—called the Heldisibund ? A. Yes, sir. 

Q. Are they indebted to your company to any extent, and if so, 
what? A. AY el 1, they are indebted at the present time from $12,000 
to $15,000. 

Q. Can you tell us what that corporation is? A. Yes, sir; I can 
state what there is about it. 

Q. Perhaps you had better state ? A. Well, it is a German organ¬ 
ization, combining health and life insurance of the members; we 
have a contract with them by which all the members are required to 
insure with us, and they have the benefit of life insurance; but they 
have found that the health insurance has cost them a little more than 
they have taken up for it; they have, therefore overdrawn , but they 
have $70,000 in bond and mortgage, and as fast as they overdraw we 
call for mortgages as security; we have already, which they have 
transferred to us, $23,000 worth of mortgages, and I have made a 
demand for $15,000 more and shall probably get it next week; they 
are perfectly able to make good any deficiency; this last month they 
had a convention of the members and increased their rates, which 
will enable them to pay up their deficiencies and a good deal more, 
if they desire it, in three months. 

By Mr. Weiant : 

Q. Are you connected with any other life insurance company ? A. 
No, sir. 

Q. And no fire insurance company? A. No, sir. 

Q. Or any of the officers of your company ? A. No, sir. 


David P. Facler sworn. 

Examined by Mr. Moak : 

Q. You are an actuary ? A. Yes, sir. 

Q. And have been for how many years? A. For about eighteen 
vears ; over seventeen years. 

Q. Have you recently made an examination of the affairs of the 
Equitable Insurance Company, in the city of New York ? A. As it 
seems to be a matter of common report, and every one seems to know 
it, there will be no impropriety in my saying that I did have some¬ 
thing to do with the examination made by a committee of policy- 
holders; I did not make it, but my part of it was to ascertain the 
liability to the policyholders under the contract. 

Q. Did you ascertain the number of Tontine policies issued by the 
company? A. There I must come to a stop, all the information I 
obtained in connection with that examination is of a purely profes¬ 
sional character, and 1 think I am not at liberty to state it, particu- 


560 


larly as it in no way affects the rights of any one; I have no know¬ 
ledge that it is material for the company to know it, or that any one 
would suffer from my withholding the information from him ; I 
consider it was obtained in a professional manner, and I am entitled 
to withhold it, and it is my duty to those who employed me that I 
should say nothing without their consent; there is nothing in it 
whatever that makes it necessary I should state it; if I should hear 
from the chairman of the committee of policyholders, under whom 
I acted, as I did not act for the company at all, a request that I 
should state it I shall have no objection to; I simply answered the 
way I did from a feeling of professional propriety. 

Q. Were you appointed by a committee of policyholders? A. 
Yes, sir; by a committee. 

Q. Representing a majority of the policyholders? A. No, sir; I 
cannot tell you as to that; I can tell you how it came to my knowl¬ 
edge if you wish to know. 

Mr. Moody — It seems to me we represent the policyholders and 
should have an answer. I don’t think there is any professional 
courtesy. It seems to me it is a proper question and ought to be 
answered. I would like to know what there is of this Tontine 
system. 

The Chairman — I don’t understand that any one on the part of 
this committee objects to the question. Mr. Facler, himself objects 
to it solely as a question of propriety between him and the commit¬ 
tee who employed him. 

Mr. Lang —I don't see how any employe can keep back any infor¬ 
mation he has in regard to the facts. 

Witness —I don’t consider I am an employe of the company; I 
was requested by a committee of the policyholders to make an ex¬ 
amination, and during that certain facts came to my knowledge. 

By Mr. Moody : 

Q. Do you think it would be to the damage of the policyholders 
to answer the question? A. Not in the least - ; I simply regard it in 
the same manner in which a doctor or lawyer would regard knowl¬ 
edge they obtained from a conversation with a patient or client, and 
I am not at liberty to divulge it. 

Q. It does not criminate any one, does it? A. No, sir. 

Mr. Green — On the part of the Equitable I would say we have 
nothing we desire to keep secret, and so far as we are concerned, we 
desire he should tell it; we would rather have it stated than not. 

By the Chairman : 

Q. Do you decline to answer without the instructions of the com- 


561 


mittee? A. Yes, sir; 1 must decline to answer; for every question 
may be a very simple one to answer, yet the same line of inquiry 
might lead to others which I would not like to answer. 

Mr. Ill sted — As this is a matter for executive session, I move 
that the committee adjourn until to-morrow afternoon at half-past 
three o’clock. Motion carried. 

Adjourned until Wednesday afternoon at 3.30. 


Wednesday, April 11, 1877. 

The committee met on Wednesday, April eleventh, at 3.30 r. m. 

Present—Hon. J. G. Graham in the chair; Messrs. Floyd-Jones, 
Weiant, Husted, Coulter, Skinner, Moody and Lang. 

Mr. Husted —Before proceeding with the examination of the wit¬ 
ness, I have a few words I desire to say. I have remarked several 
times before on the door of the Assembly chamber this session, that 
I never have known an investigating committee to be ordered by the 
Legislature, which did not resolve itself into an ad captandum or 
secret machine. I say I never have known it, and in support of that 
statement I desire to read two editorials, one from the New York 
World, as follows: 

“ Albany correspondents comment with not unnatural sharpness 
upon the facility with which the members of the Insurance Com¬ 
mittee are lending their ears to every ‘ discharged clerk of an insur¬ 
ance company,’ who thinks he has a grievance- Mr. Knapp, the 
president, and Mr. Woodford, the counsel of the Metropolitan Life 
Insurance Company, for example, have just been called from their 
duties in this city, on the strength of a letter written to a member 
of the Assembly by a former clerk of the company, who was dis¬ 
charged for incompetency. This, certainly, is not the way in which 
the community expects the working and condition of a great busi¬ 
ness interest to be practically investigated, its abuses to be pointed 
out, and the best methods to be hit upon for remedying them.’’ 

The New York Tribune has an editorial to this effect: 

“ It will be a public misfortune if the insurance investigation at 
Albany degenerates into a mere conduit for the tattle and scandal of 
discharged employes, or disappointed wreckers. Here is a bit of in¬ 
formation furnished by the Albany correspondent of the Graphic: 

“ ‘Mr. Knapp, president of the Metropolitan Life Insurance Com¬ 
pany, and Stewart L. Woodford, the counsel, arrived to-night, in 
answer to the summons of the Insurance Committee. A former clerk 
of the Metropolitan, who was discharged for incompetency, has writ¬ 
ten a long letter to a member of the Assembly, making charges 
against tlie company. This letter has been handed to the committee, 
and these gentlemen have been called here to answer questions on 



562 


the points enumerated in that letter. It is understood that the 
points embraced in that letter are the same as those on which the 
party writing* it once commenced a suit against the company, and 
was ruled out of court on his own testimony.’ 

“ It is discreditable if the committee permits itself to be used in 
this way. But, on the other hand, if some of its members are con¬ 
sciously using witnesses of this sort for ulterior ends of their own, 
the proceeding is infamous.” 

Now, I don’t believe any member of the committee is consciously 
using any witness for an ulterior end of his own ; but this is the 
idea, that if this investigation is to be pursued in any line which, de¬ 
viating from the great question we are called upon to solve, namely, 
the framing and recommendation of laws which, for the future, shall 
protect the policyholders, shall compel the officers of insurance 
companies to conduct their business in such a way as to reflect credit 
on themselves, and credit on the community at large—if the com¬ 
mittee goes beyond that, it goes beyond the purpose for which it was 
appointed. I think in this investigation we have ascertained all the 
information necessary to obtain for the purposes of legislation, and I 
protest against a personal investigation, which seeks, in any way, to> 
throw disrespect on individuals, or any investigation which has for 
its purpose a selflsh end, and is sought to be foisted on the committee 
having no good purpose to serve. I refrain from any further dis¬ 
cussion, but, if necessary, I can go still further and say a good deal 
more. 

The Chairman —The inquiries made yesterday, were made upon' 
the basis of the letter referred to by the gentleman. I have never 
seen the letter at all, but it was understood the questions were put at 
the request of a member of the committee, who had received that 
letter from a member of the House, and when his authority for 
requesting the questions to be asked is a member of the House who 
has been very active in this matter, I think he is justified in having 
them put. While the committee acts on the authority of the other 
members of the House, they have a reasonable amount of discretion 
to use, yet it must follow that some attention must be paid to a rea¬ 
sonable request of other members who claim to be familiar with the 
question. The committee was not acting in any way at the request 
of a discharged employe, and I never heard of it until to.day. 

Mr. Husted —I don’t want the committee to be used as a sewer 
pipe for every person to throw his garbage in. 

Mr. Weiant —Well, do you think it is being so used % 

0 

Mr. Hosted—I know it is. 

Mr. Weiant —Then it is a wonder you didn’t raise your protest 
before. 


563 


Mr. Husted— I 
of it. 


don’t mean to say the committee was conscious 


Mr. Lang —That letter I handed t > Mr. Moak, as it was handed 
to me by a member of the House, and T supposed that the charges 
contained therein were true. If that were so, then we should not 
be pardoned for not making inquiry into them, and if there was no 
truth in them, that fact would develop itself on an inquiry being 
made. If w T e neglected to inquire into it, and it should turn out 
there was some truth in it, then there is danger that we should be 
charged with doing, not what we are charged with now, but making 
a slippery machine instead of a smut machine of this committee. 
The resolution says we shall investigate this matter, and if we avoid¬ 
ed that letter, and ignored its existence, we shall be charged with 
attempting to cover up rather than throw light on insurance matters. 
I said to Mr. Moak when I handed the letter to him, “ Mr. Moak, it 
will be better to have the president here, and if these statements are 
false, he will be glad to brand them as false before the committee.” 
It seems to me, where charges that are false are made, no harm can 
possibly result from an investigation, for truth will always shine. I 
said to Mr. Moak, in so far as the letter enters into private matters, 
or in so far as he could see in that letter a disposition to blackmail 
or injure any one I wished he would not make the inquiry, because 
we did not propose to be used as a smut machine or sewer pipe 
through which persons could run their dirty stuff. Mr. Moak agreed 
with me that there were matters in that letter which did not pertain 
to this investigation, and in consequence of that he did not ask the 
question. 


Mr. Moak —Perhaps I may be allowed to say a word to the com¬ 
mittee. In so far as the examination of witnesses is concerned here, 
I have endeavored, so far as I could ascertain the facts, to confine 
myself strictly and technically to the matter under consideration, 
but I do not quite agree with some of the ideas advanced, and 
therefore I shall take this opportunity of explaining my conduct. 
Now some of these companies have from $20,000,000 to $30,000,000 
in charge, and it seems to me they ought to be pretty thoroughly 
investigated. Every man who has yet been examined, has told us 
this business was of such a special character that even those trained 
in the law—and there are many of us sitting around this committee 
—that they could not explain it to us so that we could understand 
it. If that be so, I fail to see where there is any thing wrong in 
bringing men who were discharged by insurance companies here. 
They know if there is any irregularity, and it is claimed that in 
three cases out of five, they were discharged because they could not 
be used for an illegal purpose. If they tell the truth, the gentlemen 
here are competent to discover it, and if they tell what is false, the 
gentlemen connected with the insurance companies are reputable 
men and can come here and refute it. I don’t know how the com¬ 
mittee will get any thing unless men are called here. The men who 

36 



564 


low go on the stand, you can’t get any thing out of them, and it is 
charged that many of the answers have been evasive, even when 
one can get an answer from them. It strikes me as a novel propo¬ 
sition, the idea that a man who has been discharged from an 
insurance company should be branded as dishonest. That is 
something new to me. He may be as honest as any one else, 
if he is not you will discover it, if he is you will also discover 
it. It seems to me if you don’t get the information from him, I 
don’t know where you will get it. The idea sought to be conveyed 
in certain newspapers that because a man has been discharged from an 
insurance company either for something he has done, or would not 
do, that he must necessarily be dishonest and unworthy of belief, 
goes to the very foundation of justice. Unless these men can be 
called and treated as fairly as you treat the president of an insurance 
company I don’t see how you can get any information, and I submit 
to the committee that when a man is discharged from an insurance 
company that he is so followed by that insurance company that they 
are positively afraid to open their mouth and tell what they know 
from fear of the way they are dogged by the company, and I have 
found that those men are the most difficult to get information from. 
So much has that- been the case that over and over again they have 
refused to meet me in my office, and I have been unable to get any 
thing out of them. 

Mr. Floyd-Jones— I have attended the committee at nearly every 
meeting, having only been absent when I had business which I must 
attend to, and i feel that I am almost worn out by committee busi¬ 
ness. I think every member of the committee feels same way. I 
therefore move that this investigation cease with the witness now 
before the committee. 

The Chairman— V^e had better take that up when the witnesses 
are through and discuss that in executive session. 

Mr. Skinner— In reference to the newspaper reports, which 
a j -pear to-day, with reference to the president, which appeared here 
yesterday afternoon, I have this much to say. When the investiga¬ 
tion was started it was conceived to be fair to give those gentlemen 
on the floor of the House a chance to come before us and state the 
foundation for their brilliant speeches; that opportunity was given 
them, and one or two came before the committee and did so ; to 
pursue the inquiry still further, an opportunity was given them to 
hand to the committee, which they have done, questions to be handed 
to the counsel for the committee; those questions which came before 
11s yesterday were received that way, and it is but just to the counsel 
to admit, that, in his judgment, not over half a dozen of at least fifty 
questions were asked Mr. Knapp yesterday afternoon. 

Mr. Moak—I am frank to say that there were a good many ques¬ 
tions in that letter that had no bearing on the subject. 


565 


Mr. Skinner— There were questions in that letter that were not 
tit to be asked a gentleman, and Mr. Knapp ought to be satisfied in 
coming before the committee, for if others feel as I do, they will 
feel more confidence in the Metropolitan now than they did before 
he came before the committee ; I have not attended every meeting 
of the committee, and, therefore, have not heard everything that 
has been testified to, and I don’t consider the committee intend or 
ever did intend to cast any undue reflections on an insurance com- 
pany, but it strikes me that the Metropolitan, so far as I have heard, 
has come out ahead. 

Judge Coulter— lam sure the committee will agree with me, 
that it was too bad to bring Mr. Woodford up here ; but it strikes me 
he would come up here next week on the same conditions. 

The C hairman— -I suppose every member of the committee has 
been placed in the same position as myself, and have received vastly 
more questions than they have put. 


Examination of David P. Fackler resumed: 

Bv Mr. Moak : 

Q. The question I asked for yesterday, was substantially this: 
whether you, in your examination, had ascertained the number of 
Tontine policies which had been issued by the Equitable, since its 
organization ? A. No, sir; my examination did not necessitate finding 
that fact, and so I did not examine into it; I have no data from 
which to give you that particular information. 

Q. Did you ascertain any number of Tontine policies which had 
been issued by the company, independent of the number in force— 
those which had been issued ? A. There are some 11,500 which are 
in force. 

Q. Now in force ? A. Yes. 

Q. Did you ascertain the number which had been forfeited or 
lapsed of that class of policies ? A No, sir; for that would have 
necessitated finding the number originally issued. 

Q. Did you ascertain what the Tontine periods were for which 
they were issued ? A. No, sir; I was not instructed to make an in¬ 
vestigation in that regard. 

Q. Did you ascertain the reserve upon the Tontine policies which 
are now in force; the amount of reserve? A. I did. 

Q. What was that ? A. Two millions eight hundred and thirty- 
eight thousand five hundred dollars. 

"Q. As I understand it, these Tontine policies are issued upon the 
theory that those who go in a particular class of these policies, or 
what are called for Tontine periods, take such portions of the sur¬ 
plus and reserve on the policies which become forfeited, or expire 
before the expiration of the Tontine period, do they not? A. Your 
question is framed in such a way that T can hardly answer it by yes 
or no. 


566 


Q. Well, I will give you an example of what I mean: suppose a 
hundred men take policies for $5000 each on the Tontine plan, pay- 
able at the expiration of ten years from the time they are issued, or 
within ten years from the time the first is issued ; suppose fifty of these 
policies, before the term of ten years expires, become lapsed either 
from non-payment of the premium or some other cause, or the party 
dies; as I understand it, all the surplus upon the policies, and all the 
reserve upon the policies that have so lapsed by non-payment of pre¬ 
mium, go to the remainder of the persons who are in the Tontine 
class ? A. That is the condition. 

Q. Did you ascertain the amount of the reserve upon the Tontine 
policies which had been lapsed or forfeited in any way ? A. I did 
not ascertain it as separate from the surplus, that is those that were 
lapsed. 

Q. Did you ascertain the amount of surplus or reserve upon Ton- 
tine policies which had been lapsed and forfeited in the company ? 
A. Not separately from the total surplus on all policies. 

Q. On all policies ? A. On all Tontine policies. 

Q. Well, that was my question ? A. Your question was whether 
I ascertained the amount of reserve and surplus on forfeited policies ; 
I said I did not ascertain that separately; I ascertained simply the 
surplus on all Tontine policies, and that would include all policies in 
force, and the reserves on all policies which had been forfeited also. 

Q. Would it include all the reserve and surplus on all policies for¬ 
feited in the Tontine class ? A. Y^es, it would include all the sur¬ 
plus ; it is made up of every surplus; such assurplusfrom forfeited 
policies, reserves from forfeited policies, etc. 

Q. And that in the aggregate amounted to how much ? A. Two- 
million two hundred and one thousand five hundred dollars. 

Q. That was the surplus on all the Tontine policies in the com¬ 
pany ? A. Y^es. 

Q. Y r ou did not ascertain the extent of the Tontine periods, when 
they run ? A. I made no classification according to that. 

Q. Did you ascertain the Tontine periods; when did they com¬ 
mence, and when did they end ? A. They are different in different 
policies. 

Q. That is what I want to get, the different ones? A. I have a 
statement showing the Tontine periods in different policies, but I 
have not made a classification of individual policies. 

Q. I ask you when the Tontine periods are? Y. I don’t under¬ 
stand you. 

Q. There are certain periods called Tontine periods, are there not' 
A. Yes. 

Q. When are those periods, when did they commence, and when 
did they end, all of them, in the company, according to the policies 
issued ? A. They are for different periods; for ten (10), fifteen (15) y 
or twenty (20) years from the time the policy is issued ; some termi¬ 
nate next year, and some the next year, and so on indefinitely. 

Q, Do those policies usually terminate at the end of a given 
period from the issue of the policy, or at certain definite periods- 
agreed upon in advance ; or in other words, suppose a company 


wants to commence a Tontine period now, would it fix the period 
ten (10) years from now, and then all persons choosing to insure in 
that class would be insured for that period ? A. I wish you would 
allow me to state the way it is; a man insuring now on the Tontine 
plan would elect whether his period should cease at the end of ten 
(10), fifteen (15), or twenty (20) years, and decide as he might choose, 
and he would be classified with others making the same selection of 
Tontine period, and his policy would be kept with the others, and 
mature at the same time. 

Q. Then a large number would mature at the same time, 
provided they did not lapse or expire by death or some other way ? 
A. Yes. 

Q. Do they have a new class every year ? A. There are new 
classes made every year, that is for ten, fifteen or twenty years, 
respectively, according to the different kinds of policies there ; there 
might be twenty different classes started each year. 

Q. IIow many different classes ? A. Some men might insure on 
the ten payment life plan and elect the ten year Tontine ; some 
might take the ten payment life plan and elect the twenty years 
Tontine; some might take the fifteen payment plan and elect the 
ten or twenty years Tontine; some might take a different payment 
or an ordinary life policy and select which one of those terms he 
pleased, so that they are difficult to get at. 

Q. Did you ascertain the reserve on all the policies of all classes 
owned by the company? A. Yes. 

Q. IIow much was it ? A. Twenty-jive million seven hundred 
.and forty seven thousand dollars. 

Q. Did you ascertain the entire surplus of the company, Tontine 
and non-Tontine ? No ; and, in explanation of that, I will say I 
took no cognizance of that; it was not in my department of the 
•examination, and I took no cognizance of the actual assets. 

Q. Did you not ascertain the amount of assets claimed to be on 
hand by the company ? A. 1 was not requested to do it. 

Q. Did you ascertain, was my question ? A. No. 

Q. Either by information or otherwise ? A. No. 

Q. Did you ascertain the aggregate assets of the company ? A. 
No. 

Q. Did you ascertain, in any way, the aggregate of all the surplus 
•of the company? A. No. 

Q. Beyond its liabilities ? A. No. 

Q. Either by information or otherwise ? A. No. 

Q. What was your examination for? A. To ascertain the policy 
liabilities of the company. 

Q. Nothing more than that ? A. Nothing more. 

Q. It was not to ascertain the reserves of the company \ A. No. 

Q. Or any thing except that simple fact ? A. No. 

Q. And you have no statement of the amount of its entire assets 
and have heard none ? A. No. 

Q. Do you know whether the surplus upon the Tontine policies is 
included in the general surplus, and with the general surplus of the 


568 


company ? A. You must put that question in a little more definite 
shape. 

Q. Have you any knowledge whether the surplus upon the Ton¬ 
tine policies is separated from the general surplus of the company; 
is the surplus kept in one round sum, or is the Tontine surplus kept 
separate from the surplus upon the other policies ; A. The papers 
of the actuary make the statement of the Tontine surplus as such, 
and I think there is a statement made showing what the total sur¬ 
plus of the company was at the valuation of a year ago, and what 
the surplus on every policy would be. 

Q. What was the entire surplus of the company as shown by the 
actuary’s book? A. That was not strictly within my province, and 
I did not look at it enough to be able to state from memory. 

Q. Can’t you approximate it ? A. I should say the surplus on 
every policy would be in the neighborhood of $3,000,000, taking 
the thirty-first of last December as the basis. 

Q. This surplus on Tontine policies belongs to the Tontine policy¬ 
holders ? A. It does. 

Q. It is not properly nor technically an asset of the company, 
except as it may belong to its policyholders, is it; in other words, 
it is not applicable to the general purposes of the company, is it ? 
A. No. 


Q. It is applicable only to the purpose of paying the Tontine policy¬ 
holders? A. That is the only equitable purpose it can be made 
applicable to. 

Q. It is the only proper and legal application of it as you think, 
as an actuary, isn’t it ? A. Yes. 


By Mr. W eiant : • 

Q. Is it an asset of the company; does it belong to the company, 
or does it belong to the particular holders of the Tontine policies? 
A. They are a mutual company, and it belongs to the company in 
trust for the Tontine policies. 

Q. Should it not appear separately in the report made to the In¬ 
surance Department, in order to give a proper idea of the standing 
of the company ? A. Yes. 

By Mr. Moak : 

Q. Is it usually reported separately, or have you ever seen it re¬ 
ported separately ? A. It has been stated on one side. 

Q. Does not the report for 1875 show it to be only about $1,000.- 
000? A. Yes. 

Q. Du you remember what it was stated at for 1876 ? A. It is 
not yet published in the report. 

Mr. Moak —I have a copy of the report for 1876 here, and it is- 
not stated. 

Q. Do you know whether the general surplus and the Tontine 


569 


surplus is reported separately or not for the year 1ST6 ? A. I do not. 

Q. Ton have not seen a copy of the report? A. I have not. 

Q. And you made no inquiry as to the amount of assets of the 
company, or character of the assets, yourself? A. No. 

Q. And have no information upon that subject ? A. No. 

Q. Did this $2,201,500 include all the surplus of every character 
that properly belonged to the Tontine policies; of all the Tontine 
policies of the company ? A. So I believe, to the best of my esti¬ 
mate and investigation. 

Q. Did you estimate the liability of the company upon all the 
policies of the company ? A. Yes, sir. 

Q. As an actuary? A. Yes. 

Q. Did you estimate its liability upon the Tontine policies sepa¬ 
rately from the others ? A. I did. 

Q. What was that liability ? A. I stated, $2,838,500. 

Q. That is exclusive of the Tontine surplus ? A. Yes. 

Q. When does the first Tontine period end? A. Well, sir I be¬ 
lieve one or two of the shorter Tontine periods have already ended; 
originally some of the terms were shorter than ten years; now they 
are for ten, fifteen and twenty years. 

Q. Well, when does the first one terminate? A. I believe the 
first one terminated last year. 

Q. When does the next terminate ? A. Probably one or two will 
terminate this year. 

Q. You have not the amount which terminated in any particular 
year as distinguished from the aggregate amount ? A. No. 


By Mr. Moody : 

Q. There is no class of policies terminating in any particular 
year, but simply one policy which was issued for ten or fiiteen years ? 
A. They are not made up in periods; they are classified after they 
are taken by the policyholders; a man insuring on that plan, elects 
whether his policy shall terminate in ten, fifteen or twenty years; 
out of the thousand, perhaps, that insure that way, there will be 100 
that elect the ten years, 100 that elect the fifteen years, and 100 that 
elect the twenty years, but those may be only the ordinary life 
policies; there may be others who take the ten years' plan and elect 
the ten years’ Tontine; others may select the fifteen or twenty year 
Tontine, and in that way you make up a large number of classes. 

Q. For instance, there is in one company but five policies issued 
of the twenty year class this year, that would terminate at once ? A. 
Yes. 

Q. And they who live the twenty years get the benefit? A. 
Yes. 

Q. They got the benefits of any other policies which have expired 
or lapsed ? A. That is my understanding of the Tontine contract. 

Q. So if there was only one, he would get the benefit of his own 


paying in 


? A. Yes. 


By Mr. Moak : 

Q. Is this Tontine surplus reported in the surplus of the company 


570 


as a liability of tlie company ? A. It is not so reported, and it is not 
required by the forms of the department. 

Q. It is not reported as a liability ? A. No. 

Q. It is not included in the aggregate of liabilities stated in the 
annual report ? A. No. 

By Mr. Husted : 

Q. Is it a liability, Mr. Fackler ? A. Well, it is a liability from 
the company in general to the Tontine policyholders ; it is a sum which 
is equitably due to the Tontine policyholders, and is certainly an 
equitable if not full legal liability. 

By Mr. Weiaxt: 

Q. Is it not a legal liability of the company ? A. I would not 
say it is not. 

Q. Is it not your opinion it is? A. I would say it was rather 
than that it was not, and when I use the term “ legal liability,” I 
meant under the insurance law; I doubt whether the insurance law 
would allow the superintendent to make that an absolute liability, 
coming within his purview of the liabilities of which he is to take 
cognizance. 

Q. It is a liability to the policyholder, is it not ? A. It is. 

Q. As much so as it is to the policy ? A. Equitably, it is. 

Q. Equitably and legally, they owe the man that amount as much 
as they owe him the face of the policy ? A. Yes, sir. 

By Mr. Husted : 

Q. Is it not a liability which may be reduced in certain events by 
the loss of the surplus portion of the assets of the company ? A. If 
the company should sustain an extremely heavy death loss, and the 
reserve fund becomes itself impaired, the reserves on the Tontine 
policies would have to be made up out of the Tontine surplus ; but 
I think it would be both inequitable and illegal to make up the reserve 
on non-Tontine policies out of the Tontine surplus; I mean illegal 
in the sense that law is justice; but under the insurance law it might 
be that a company could be allowed to do it; that is where I distin¬ 
guish between law and equity. 

By Mr. Moak : 

•/ 

Q. If they were to do that they would have to replace it when 
their liability became due, from some source; suppose in order to 
make up the reserve, they take a million dollars ($1,000,000) from the 
Tontine surplus, when the Tontine policies became due they would 
have to pay that million dollars ($1,000,000) from some source ; those 
Tontine policies are entitled to that million ($1,000,000), are they 
not, when they become due ? A. As I said previously, unless that 
million dollars ($1,000,000) is reduced by losses on Tontine policies. 

Q. But if it is reduced on losses of Tontine policies it is paid as a 
loss equally ? A It is not a fixed liability which could not be 
reduced ; it may be absorbed in paying Tontine policies. 


571 


Q. But when it is paid on Tontine policies it is a liability of the 
company, is it not; A. No, sir, it is not; it ceases to be a liability. 

Q. Well, if it is not in the surplus you can’t pay it out of that, can 
you ; if you have not got it there you have to pay it from somewhere 
else, don’t you ; A. What I say is— 

Q. Can you conceive of any state of facts in which it will cease to 
be a liability for the amount of the surplus; if you tak« the sur¬ 
plus for one purpose you have to replace it from somewhere else, 
don’t you ? A. It could be taken only for Tontine purposes. 

Q. Is it ever taken for any thing else ? A. Not to my knowledge; 
I am not inside of any of those companies, so I cannot tell; I have 
no reason to suppose it is. 

Q. You have never known the Tontine surplus to be taken to pay 
ordinary life policies? A. Not ordinary life policies, no. 

Q. But if it is kept all together you could not tell until the entire 
surplus was exhausted which it was taken from, could you; in other 
words, you cannot tell whether this Tontine surplus was taken, or 
any other surplus, if it is kept all together ? A. If it were all kept 
together it would be impossible to do it. 

Q. You say it is all kept together in one fund? A. I told you I 
saw in the actuary’s hands papers in which each was estimated. 

Q. What papers were those ? A. Papers in the actuary’s hands. 

Q. Well, what papers were they? A. Pieces of foolscap. 

Q. Do the books show that ? A. Those estimates were made 
from the books. 

Q. Suppose a man was an entire stranger, could he go into the 
books of the company and ascertain the amount of the Tontine 
surplus? A. Yes. 

Q. From the books? A. Yes, sir. 

Q. As they are now kept? A. Yes. 

• Q. Is this $2,000,000 and over of Tontine surplus reported as 
among the surplus to the State superintendent ? A. I can’t say ; I 
have not seen this year’s report. 

Q. Was it in 1875 ? A. Last year, under the general head of lia¬ 
bilities, he has an amount which is not added in with the liabilities. 

Q. What amount? A. To the amount of $1,000,000. 

Q. It is not added in as a liability anywhere, is it? A. No. 

Q. Well, so far as the report is concerned, in arriving at the 
aggregate liabilities and assets it is not figured in, is it? A. No. 

-Q. Now, then, is that surplus included in the surplus reported, 
in other words, is it reported as surplus ? A. Yes, it is. 

Q. So, instead of being stated as a liability, and added as a liabil¬ 
ity, it is carried on the other side, and treated as surplus? A. Yes, 
according to the statement of the report. 

Q. It is not included in the $24,175,640 as liabilities of the com¬ 
pany reported in 1875, is it ? A It is not. 


or 


By Mr. Greene : 

Q. It is included in the total liabilities of the company, is it not ? 
A. As I stated before it comes under the head of general liabilities. 


572 


By Mr. Moak : 

Q. Is it put there for any thing more than to make the books 
balance; it is not treated as a literal liability of the company, is it \ 
A. No. 

Q. And instead of being carried in as a surplus, it is carried in on 
the liability side to make the balance even ? A. 1 es; the surplus is 
carried in. 

Q. jD o you know how much the entire surplus was , as reported ? 

A. In 1875. 

Q. In 1875, from the published report, what was the surplus of 
the company, exclusive of the surplus upon the Tontine policies? 
A. Do you mean on December 31, 1875. 

Q. Yes; I mean according to the published report, assuming the 
Tontine surplus to be as there stated? A. Over and above the Ton¬ 
tine surplus, $3,109,400. 

Q. That is assuming the Tontine surplus to be the amount stated 
there? A. Yes. 

Q. Has that Tontine surplus increased over a million dollars 
($1,000 000) within the past year ? A. My inquiry was/not directed 
so as to ascertain how much it had increased during the past year, so 
I cannot answer definitely. 

Q. Can’t you approximate ? A. I should say it was less than that. 

Q. It would be considerably less, would it not ? A. Yes. 

Q. According to your best judgment, would it increase $750,000 ? 
A. I should think less than that. 

Q. According to your best judgment, would it be $500,000 
increase ? A. I should think it might possibly be. 

Q. According to the ordinary doctrine of life insurance, what 
would be that amount ? A, The elements of the estimate are of such 
a nature that it is very difficult to make up a correct estimate. 

Q. Well, take the ordinary risks ? A. It might have been half of 
it, or even more. 

Q. It ^’ould have to be a very extraordinary occurrence that would 
make it even half of it, would it not; or quite extraordinary ? A. 
It would simply indicate a certain condition of the business, a certain 
large increase of policies within a certain time, developing a surplus 
very rapidly within the last year. 

Q. Is it not a fact known to every insurance man, that insurance 
for the past year, instead of increasing lias decreased considerably, as 
a rule ? A. Yes; but if you will allow me to say that, in my percep¬ 
tion of the real matters in this case, it will have no bearing on it at 
all. 

Q. I am speaking of the year past? A. Well, the worse the insur¬ 
ance business, the larger the Tontine profits might have been. 

Q. Of course, the more policies forfeited the more that would be 
so; but assuming the same ratio of policies of that class were for¬ 
feited as of other classes, would the surplus be $500,000? A, Very 
possibly the tendency of the Tontine surplus is to increase very rap¬ 
idly in almost geometrical progression ; I should say it would increase 
by ever increasing additions. 


573 


Q. The only increases would be the new premiums paid, the sur¬ 
plus and reserve that are forfeited, and the interest on it; would 
there be any other increase ? A. Well, practically there might be 
a great increase from the diminished mortality, below what should 
be expected from the tables; that is a possible source of increase. 

Q. Has there been diminished mortality, so far as insurance is 
concerned ? A. I don’t say there has. 

Q I am confining myself to last year ? A. Well, that I don’t 
suppose entered into the increase last year. 

Q. Would there be any other source of increase that you know r 
of in the last year, except the increase from the premiums on new 
policies, reserves forfeited, surplus forfeited, and interest on the 
Tontine surplus ? A. Those are the principal elements of in¬ 
crease. 


By Mr. Moody : 

Q. Do you know whether that amount given in the report of 
1S75, was arrived at by computation, or whether it was a conclusion 
■jumped at generally ? A. I see it is mentioned as an estimate ; I 
have never had any connection with the Equitable, and was never 
consulted with regard to the making of the statement there, and 
therefore I am not able to testify in regard to it. 

Q. You made the computation, as I understand you, this year, 
and the sum you gave this year is from the computation made ? A. 
Yes. 


By Mr. Moak : 

Q. Up to what time did your computation come ; was your state¬ 
ment based on a computation of the condition of the company on 
the 31st of December, 1S76 ? A. It was. 

By Mr. Greene : 

Q. Are you familiar with the report published in 1876 ? A. I 
am. 

Q. Will you look at the statement here made under the head of 
liabilities, and state to the committee whether this sum of $25,000,000 
odd includes all the policies of the company, Tontine and otherwise ? 
A. I should think it did ; I state this not of my own knowledge, but 
it is so intended in the report. 

Q. Those liabilities, as liabilities to policyholders, amount to how 
much? A. To $24,475,000. 

Q. And the gross suiplus on policyholders' account is how much ? 
A. Four millions one hundred and nine thousand dollars. 

Q The total liabilities reported are how much? A. Well, that is 
$28,585,040. 

Q. In answering the question of Mr. Moak, as to the amount of 
surplus, exclusive of the estimated surplus on Tontine policies, did 
you deduct the $1,000,000, stated in the report, from the gross 
surplus, in order to frame your answer of $3,000,000 oddA. 
Yes. 


574 


Q. That was the source of your information? A. Yes, sir. 

Q. I understood you to say you considered this surplus as belong¬ 
ing, as you call it, to the Tontine policyholders, and you consider it 
to be a liability to the company ? A. Yes. 

Q. Is there any difference in that liability and the liability on the 
surplus upon the other policyholders’ account ? A. Yes. 

Q. What ? A. It might take some previous thought and some 
time to express the definite distinction that might be made between 
those. 

Q. Is it a legal or actuarial question, or both? A. Well, it in¬ 
volves actuarial knowledge, and 1 think any person with an ordinary 
sense of justice, without legal education, could decide on that mat¬ 
ter ; it might take some little time to express it. 

Q. Well, I will ask you this question: when you say, in answer to 
Mr. Moak, that the Tontine surplus and the surplus belonging to the 
other policyholders is put together, do you mean they are embraced 
in the gross assets of the company, or what? A. You are referring 
to an answer of mine? 

Q. Y es ? A. That wae my meaning; I wish to make a remark 
here, that my declining to answer questions yesterday, arose solely 
from questions of propriety in my mind, but since that I have re¬ 
ceived a telegram from Governor Morgan, the chairman of the com¬ 
mittee, stating that he had conferred with a majority of the commit¬ 
tee, and there was no reason why I should not answer every ques¬ 
tion. 

Q. I see by yesterday’s Associated Press report that you are re¬ 
ported as having said yesterday, there was nothing materially 
damaging to the Equitable shown in the examination; I did not 
heai' you make such a statement as that ? A. The only thing I said 
that could have been understood that way was this, that I thought 
there was nothing in my examination which was material for the 
company to know, and it certainly was nothing damaging in my ex¬ 
amination that I know of. 

By Mr. Moak : 

Q. You don’t mean to say, in the report of 1S75, the $24,000,000 
and odd of liabilities to policyholders includes the surplus upon Ton¬ 
tine policies, as you understand it ? A. No, it does not. 

Q. And the gross surplus, including the surplus upon Tontine 
policies this year, was how much? A. To December 31, 1876? 

Q. Yes ? A. I have no knowledge as to that; I have understood, 
in an indirect way, that it is somewhere in the neighborhood of 
$5,000,000; I think Mr. Hyde testified to that. 

Q. You did not know in the course of your examination & A. No. 

By Mr. Weiant : 

Q. Is there such a plan of insurance as is known by the reserve 
dividend plan ? A. Yes, sir. 

Q. Won’t you explain that to us ? A. It is, I believe, very much 
the same as the Tontine plan; there are some features different; I 


575 


t link after five years a man may nse a portion of the surplus which 
is deposited and stands to his credit, to pay the premium; or it may 
lie after ten years; I am not familiar with it. 

Q. Can you name any company doing business on this plan ? A. 
The Metropolitan is the only one I know of. 

Q. Do you know of any others? A. Not on that particular plan. 

Q. 1 asked you the question whether you would not give us a full 
explanation of this mode of insurance; won’t you do it ? A. The 
briefest way is to sav it is like the Tontine plan. 

Q. Give us a full description of it; what are the distinctions be¬ 
tween this and the ordinary mode of insurance ? A. I believe the 
system is, the man is to have no dividends until the end of ten or 
twenty years, or something like that, and he is notified, in case he is 
remiss in his payments, there is no payment of any cash surrender, 
or any paid-up policy ; every thing lapses to the company in case of 
his failure to pay his dividends, if he is insured on that plan ; but if 
he continues his payments and dies in the meantime, he receives the 
face of his policy without dividends; I think, however, a man is 
allowed a certain proportion of what his guarantee is that stands to 
his credit, to keep his policy up for a certain number of years, but 
whether five or ten I don’t understand; I have had very little occa¬ 
sion to examine it, and, therefore, T am not familiar with it. 

Q. Should not the surplus credited to the holders of such policies 
be stated separately in the balance sheets? A. I should say so. 

Q. And also in the report to the department as a liability ? A. 
Yes. 

Q. The same as now in the Tontine ? A. I see no reason for 
making any difference; I never examined those policies carefully, 
and never had any expert knowledge of it; it is a matter of general 
intelligence. 

By Mr. Husted : 

Q. What companies use the Tontine plan ? A. Most particularly 
the Equitable, the New York Life, the Globe, the Germania, I be¬ 
lieve, has begun to do it, and there may be a few other companies; 
it is scarcely a feature among other companies, though. 

By Mr. Wei ant : 

Q. I would like to ask you this question, if you can answer it; 
about what would be the surplus say, of the Equitable Life Insur¬ 
ance Company, according to the Massachusetts standard, including 
the Tontine surplus ? A. Well, I should hardly like to make any 
estimate right off-hand that way; I have known the variations in 
companies to he very considerable; that is, the variation of the dif¬ 
ference between four and a-lialf and four per cent valuation ; I have 
known them to be all the way from about, I think I might almost 
say from five per cent up to ten or fifteen per cent even, according 
to the kind of policies ; it would average larger in companies according 
to the age of the company itself, and the age of the policy, whether 


* 


I 


576 


it has been long in force or not; I would rather not make an off¬ 
hand statement that way, if the committee will excuse me. 

Q. You can state approximately? A. If you will give me the 
insurance report of Massachusetts last year, and also what they re¬ 
port, I may be able to tell you; I can find what the difference was 
last year. 

Q. In order to get'at the difference from that report , in this State , 
can't you take that basis and tell us what the surplus would be on 
that standard ? A. I could do so, but it will take time. 

By Mr. Moak ? 

Q. About how much more surplus on the $1,000 does the Massa¬ 
chusetts plan require than the New York plan? A. Let me put the 
question this way: how much more reserve does the Massachusetts 
plan requre than the New York plan ? 

Q. Yes, approximately? A. In the neighborhood of ten per cent. 

Q. Then if the reserve in New York was $1,000, the reserve in 
Masssachusetts would have to be about $1,100? A. Yes. 

Q. Then it is very easy to take one from the other? A. I say 
that is not the rule : it might be only five per cent and $1,050 to the 
$1,000, or it might be over ten per cent. 

Q. It takes a good deal more reserve at four than it does at four 
and a-half per cent? A. Yes. 

By Mr. Weiant : 

Q. Can’t you tell us about what the difference on the per centage 
is ? A. I say ordinarily ten per cent. 

Q. Assuming that to be correct, what would be the amount count¬ 
ing the surplus to the Tontine policyholders as a liability — what 
would be the surplus of the Equitable Life? A. Well, sir, I think 
I would be thoroughly justified m requesting not to be asked that 
question; there is a very large sum of money in the Equitable, and 
it would require consideration. 

Q. You fixed about the per centage, and upon that you can fix it ? 
A. As I say, I may do great injustice; I might be stating as testi¬ 
mony that on the Massachusetts plan their surplus would be so 
much, when in reality I might do great injustice owing to the circum¬ 
stances of the case. 

By Mr. LIusted : 

Q. I understand you, in connection with that, to say, it would 
depend upon the classes of policies, how the different kinds of poli¬ 
cies read, and the ages of them? A. Yes, sir; my statement may 
be considerably in error, and it would be doing injustice to myself 
and the company; I might be correct in the statement , and yet it 
would in reality be only hearsay. 

Q. And you could not give a correct statement ? A. No, I could 
not off-hand. 


577 


Mr. W eiant —I think it is a fair question; he lias already deposed 
as to what is the correct standard. 

The Witness —I am perfectly willing to give the information if 
the committee desire it, but I beg you will not press the point. 

The Chairman —If you approximate it, it will be mere conjecture; 
it will not be considered as accurate of course. 

The Witness —I am frequently surprised to find when I make a 
guess, although I endeavor to be as accurate as possible, I am con¬ 
siderably out of the way. 

Q. When you made the last answer as to the basis being ten per 
cent, were you guessing ? A. It is the experience in a general way, 
but to take ten per cent would be guessing. 

Q. You have no knowledge or information which would lead you 
to say that that was the correct per centage ? A. It would not be the 
correct per centage for all companies. 

Q. You have no information or knowledge to lead you to state 
that ten per cent is correct ? A. I say it is about the correct per 
centage. 

Q. Then from the knowledge you have, I desire you to state upon 
that basis about what would be the surplus of the Equitable Life, 
counting the Tontine surplus as a liability ? A. If the committee 
orders me to answer I will doit fairly, but I think it is possible to do 
injustice to the company. 

Mr. Husted— I move he be excused from answering a question, 
which he cannot answer with fairness. 

The Chairman— I understood him to say it varies with different 
companies. I think Mr. Fackler will be protected by qualifying his 
answer in any way he pleases. 

Mr. Moody —I call for the motion. 


Motion carried ; ayes, five, noes, two, and the witness was excused. 


By the Chairman : 

Q. Do you think, as an actuary, that there is any objection to the 
company giving a paid-up policy in cases of default in the payment 
of premiums? A. Do you mean to enacting that they shall do it 

by law ? 


578 


Q. Yes , if there is any objection , looking at it as an insurance 
man , 6*<? far as the prosperity of the company is concerned , 

/Aefr tYsAs m business ? A. lYs, I doubt the general expediency 

of a legal enactment of that hind . 

Q. That is yotor opinion as an actuary ? A. I think it is better 
to leave such matters as that to the competition amongst the com¬ 
panies ; it is a matter of contract between the insurer and the policy¬ 
holders. 

Q. What objection do you see, as an actuary, or as an insurance 
man, to making it a legal obligation ? A. That the law might, in 
fixing a certain uniform allowance to be made in all cases, require 
the younger companies to allow more than they could afford to pay, 
and it might allow the older companies to give less than they are 
to day giving, and less than competition might drive them to give, 
and it might give them a respectable reason for retiring from a more 
liberal practice, I think; I to a certain extent, deprecate interference 
with business beyond what is absolutely necessary to insure solvency. 

Q. Does not the fact of policies being forfeited operate unfavora¬ 
bly to the business of a company ? A. Yes, and it is their interest 
to do all they can to prevent it. 

Q. Would it not operate much more favorably to have it under¬ 
stood that it was a legal provision to have the policy non-forfeitable, 
than to leave it as a matter of discretion with them to say whether 
it shall be forfeited or not ? A. Well, I did not come prepared to 
answer these questions, and I might have to think for some time 
before answering them all; if the companies give a guaranty of 
their own free will, I should think it was just as satisfactory to the 
insured as if done under the compulsion of law. 

Q. But if some of them do not ? A. I think the majority of 
them do now; I think it is a very small number that do not 
guarantee some return, either definitely or indefinitely stated, but 
some return. 

Q. How many of them give a fixed rule for the amount to be paid 
on the return of their policies, stipulating for a fixed value? A. I 
cannot say how many; some do. 

Q. How many do you recollect ? A It is difficult to say right 
off-hand ; I don’t want to advertise the particular few companies that 
come to my mind. 

V 

Q. You believe it better to leave it to the matter of negotiation, 
in each case, between the policyholder, after forfeiture, and the com¬ 
pany, how* much shall be paid? A. That is my impression; I 
believe very little law, strictly administered, is better than a large 
amount loosely administered. 

Q. It leaves the amount to be fixed by one party, does it not ? A. 
Yes; but if it is a matter of stipulation, the policyholder will say, 
I want to know how much you will give me, and if it is not satis¬ 
factory he has his remedy in an equity suit in law; that is, if it is 
stated that an equitable amount will be given ; I think if the policy 
stated there should be an equitable amount, it could be determined 
by the courts, if no other way. 

Q. Do you approve of that? A. Yes. 


Q. Rather than to have it fixed in the policy itself? A. Rather 
than have it fixed by law; I believe it to be equitable to have com¬ 
panies state how much they would allow in case the policyholder 
stopped his policy; I have advocated, in years past, to have a cash 
value stated in case the policy was discontinued. 

Q. And have it stated in the policy ? A. Yes. 

Q. So that the policyholder would then know what it is ? A, I 
have advocated that in the policy; each company should state what 
they would do. 

Q. If you think it is best for a company to put in it what they 
think is best, is it not better to have a legal provision that they 
should ? A. No, sir ; I don’t believe in compelling them to do it 
by lift'; it is a very nice question how far it is proper to go ; I think 
if the insurance law in those cases had been properly enforced, we 
should have had no trouble. 

Q. In what way ? A. By seeing that the assets of the companies 
were what they purport to be in the reports, and that the statements 
were true; if the first superintendent of the State department had 
done that, we should never have had any failures. 

Q. You think a thorough examination would, to a great extent, 
stop failures ? A. Yes, most of the great failures affecting life insur¬ 
ance. 

Q. Well, as far as it goes, we have provisions in the new law re¬ 
quiring frequent examinations into the conditions of the companies ? 
A. That, I think, will be all that is required in that direction. 

Q. In your examinationynto the last company, or in any other you 
have made, were there any means by which you can test the value of 
the real estate mortgages ' A. Yes. 

Q. How? A. By having appraisers appointed, and having it 
done by lawyers. 

Q. Had you at the time when the loan was made, when you made 
the examination in regard to the real estate mortgages of the com¬ 
pany, loans on which had been made previously—had you any way 
of determining the value of the real estate on which the loans were 
made? A. Yes, sir, by having appraisers appointed ; in the last ex¬ 
amination I had that; I had appraisers appointed to determine the 
value of the property. 

Q. Simply for that examination A. Yes, sir. 

Q. In the ordinary examinations of the Insurance Department 
made of any company, it has not been done, has it ? A. It has not 
been done in every case, only where suspicion has been directed to 
the company, and they thought it desirable to make sure there was 
no insecurity in any branch of their assets. 

Q. Ordinarily, the examination of these securities at the company's 
office would simply show they had mortgages to a certain amount, 
and upon property in certain places? A. Yes. 

Q. It would not show the then value of the property ? A. Ordi¬ 
narily, it would not. 

Q. Do you think th e fixing of the surrender values upon policies 
would be well, except that there should he no stipulation for a paid- 
up policy ? A. I believe it is well to have the whole thing fixed by 
37 


580 


tlie company ; it is a circumstance of some companies that they have 
higher premiums than others, and seem to be very much stronger 
than others, and consequently ought to be able to make good guar¬ 
antees of cash surrenders or paid-up policies, but I think it would be 
undesirable to pass any law to cover all the cases. 

Q. You think it would be better for the policy claimant to take the 
chance of getting a larger amount, upon the grounds of the ability of 
the company to pay it, than the certainty of a smaller fixed amount ? 
A. Yes, I do. 

Q. Do you think that would be better for the seller than to have 
a law compelling them to give a certain amount ? A. Just in that 
regard, sir, I think you hardly take in the scope of my views; there 
may be policyholders who would get along better, but undue legisla¬ 
tion, while it w r ould benefit him in that particular respect, might in¬ 
jure him a great deal more in others; an extremely severe law, 
requiring a small company to give a larger paid-up policy than it 
was able, might bring about its ruin, while without such a law, it 
might go on and gain strength, and pay all its obligations to the 
heirs of the insured, which I think would be better for the people 
than any legislation that might be brought about. 

Q. I understand, one of the causes of the feeling against the com¬ 
panies is the forfeiture of lapsed policies f A. I believe it is so. 

Q. Still you think it would be better to leave it to the ordinary 
arrangements of the company, in their discretion, to pay what they 
deem best, rather than to provide by law against forfeiture ? A. 
That is my feeling against extreme legislation. 


By Mr. Weiant : 

Q. Would you approve of the following clause in a policy giving 
a paid-up policy in case of failure to pay the premium; we will issue 
another policy on the life of the person whose life is hereby insured, 
payable as above provided, on which no further premium shall be 
required, for an amount which shall be determined on the principle 
of life insurance equitably applied, that is to say, the amount insured 
by the new policy shall be such a sum as the net reserve, less, say 
eight per cent of the insurance value lost to the company by the 
change, will purchase, in revisionary insurance, payable at death ? 
A. I think many companies could, without danger, adopt such a 
policy as that, but, upon the general principles that I have stated, I 
should deprecate the passage of such a law. 

Q. Would you approve of that clause in the policy ? A. I don’t 
know that 1 would approve of that actuarially, but I don’t see any 
thing in it that will endanger a strong company. 

Q. Will it endanger the policyholders ? A. It will give the poli¬ 
cyholder insured for a long time a very large paid-up policy, and 
those insured for a short time a very small one, if any at all.' 

Q. Do you think it is a just clause to the policyholders ? A. Do 
you mean as compared with other such clauses? 

Q. Do you believe chat clause would secure to the policyholders 
all that they were justly entitled to under a policy issued with such 


581 


& clause inserted ;? A. Well, it would give him more after he had 
been insured ten or twenty years than I generally calculate is a 
proper amount to be given ; and on the first live or ten years it 
would give him less than I should state is the equitable amount to 
allow. 

Q. From your experience, do you believe, or is it your opinion, 
that policyholders will generally understand the meaning of such a 
clause, so that they would know what they would get? A. No, but 
they would ask. 

Q. Would they know themselves ? A. No. 

Q. Would it not be better to insert some plain language so the 
policyholders would know what they are going to get; would it not 
be better for the policyholders ? A I will just say, in connection 
witli your remark, that I think most companies have such a clause, 
with published tables for the use of agents and policyholders, which 
would show them how much it would work out; they have general 
clauses covering all cases which it might not be practicable to pub¬ 
lish in tables: that is that in certain forms the policy could be com¬ 
puted, and they take a table made up for all forms and place it on 
the back of a policy. 

Q. Would it not be practicable for insurance companies to issue 
policies with a clause, in such language that policyholders could de¬ 
termine definitely what they would get when the policy was surren¬ 
dered ? A. Yes. 

Q. You think it would be practical ? A. Certainly so ; there are 
some companies that do such things voluntarily. 

By Mr. Lang : 

Q. I understand you to assume it is impracticable to legislate ? A. 
Inexpedient. 

Q. Would that be so as to future policies issued by the companies 
subsequently to the time the act went into effect ? A. I meant it to 
apply to those ; it would be hardly legal to be made so as to apply 
to the others. 

Q. Can’t we establish their rights and harmonize with that law so 
that all should be satisfied ? A. The company will have to change 
its plan of doing business ; it prefers to do business on certain laws 
which it considers right. 

Q. Would it not be safer for policyholders throughout the State to 
have the law fix the amount in the" policy they should have in a 
paid-up policy ? A. Frequently companies find they are not in a 
position to pay much, and I think it best to leave it to the com¬ 
pany. 

Q. Don’t you understand as a fact that not one out of ten ever 
read their policies or know its provisions ; does not their correspon¬ 
dence with the companies show it ? A. In a great proportion it is so; 
but I think a great many more of them awe beginning to look at 
them than use to do so. 


s 


582 


Henry J. Furber, recalled at the request of Mr. Husted, as an 
expert on the subject of Tontine policies. 

The Chairman — You will proceed to make any statement you 
desire. 

Witness —The question before the committee seems to be whether 
the surplus which belongs to the Tontine policyholders should be put 
in the liabilities of the company. The first question is, what is lia¬ 
bilities?—what is surplus? Surplus is that part of the assets of a 
corporation which may be lost by a misfortune to the corporation, by 
the loss of its assets or by mismanagement of its business, without 
impairing the ability of the corporation to meet its liabilities. Now y 
we will suppose a company starts to-day to issue Tontine and non- 
Tontine policies, that it issues an equal number of each kind for the 
same amount; that whenever it insures a man for $10,000 on the or¬ 
dinary plan it issues a similar policy to a man of the same age on 
the Tontine plan; and we will suppose that after tenor fifteen years,, 
or any other length of time, the company has $30,000,000 of assets,, 
and that it has $5,000,000 of surplus. We will suppose that its 
legal reserve is $25,000,000. What do I mean by its legal reserve ? 
Every man who is insured in that company, the company has guar¬ 
anteed to pay him $10,000 when he dies, whether his policy was in 
the Tontine or non-Tontine class; to that extent the liability of the 
company is fixed, and the reserve upon that fixed liability is ascer¬ 
tained in accordance with certain laws, and a standard fixed by the 
Legislature of the State. We will suppose the reserve, regardless of 
the Tontine question, to be $25,000,000 ; we will suppose at the end 
of the time there is a surplus of $5,000,000, and half of it belongs 
to the Tontine and half to the non-Tontine policies, the reserve 
being $12,500,000 on each class of policies. How, by some misfor¬ 
tune, we will suppose the company loses $4,000,000, it has lost more 
than the surplus on the non-Tontine policies, and if $22,500,000 is 
the liability of the company, the company is impaired. Such is not 
the case, because this loss is distributed between all the policyhold¬ 
ers, one-half to the non-Tontine policyholders, and one-half to the 
Tontine policyholders. The surplus upon the Tontine policies is de¬ 
termined in this way: a careful account is kept of the funds receiv¬ 
ed from Tontine policies, or a careful account should be kept of the 
total amount of money received upon Tontine policies. To that 
amount should be added each year the average per centage of in¬ 
terest which the company receives upon all its assets. From it should 
be deducted all that is paid, not the loss of these particular Tontine 
policies, but the average per centage of the loss of the company on 
all policies. There should also be deducted the average per cent of 
expenses which the company incurs in conducting its business ; there 
.should be also deducted the pro rata share of all the losses sustained 
in conducting its affairs, for instance, if a loan should prove bad. 


583 


By the Chairman : 

Q. What do you mean by pro rata ? A. Supposing it had $30,- 
1)00,000, and $15,000,000 belonged to the Tontine and $15,000,000 
belonged to the non-Tontine, and they should lose $1,000,000; 
$500,000 should be divided to each. 

' Bv Mr. W eiant : 

«/ 

Q. It don’t make any difference how it occurs then ? A. No ; it 
is a loss to the common fund; for instance, a life insurance company 
cannot do as the old woman did, keep her butter and egg money 
separate; it cannot say this belongs to the Tontine policies, and that 
not to the Tontine policies; it cannot say this $1,000 belongs to one, 
and that $1,000 to the other. 

Q. In practice they don’t? A. No. 

Q. In theory they do? A, No they don’t. 

Q. Don’t the books show it? A. The books should show the 
amount of assets which should belong to the Tontine fund. 

Q. Do they do it ? A. I suppose from what Mr. Fackler said, 
they would, as he says a Tontine policyholder can get from the hooks 
what his rights are. I am trying to make it plain to you as business 
men, once a year the law requires each insurance company to make 
its report to the Insurance Department of the State, setting forth in 
detail its assets and liabilities; we will take, for instance, the 
Equitable report for last year; its liabilities as printed in this report, 
the total liabilities to policies is $24,475,640; I think if you go to 
the superintendent’s office and look at the report that the Equitable 
sent there, you will find they never swore to any thing of the kind; 
and these figures were never in the report when it was sent to the 
department. The blank which we have used—I don’t know how it 
is this year—but last year we were not required to fill in the figures ; 
the department don’t take any notice of this item at all, but requires 
us to give in detail our liabilities, and the department fixes the 
figures; how is it to be ascertained; what is the fixed liability of 
the company ; that is, what it is necessary to hold in order to offset 
the liability to the policyholders, regardless of whether they are 
Tontine or not? Now, after having fixed its legal liabilities, which 
the contract itself determines, the minimum liability, if you please, 
the cash over and above that amount is what we call surplus, because 
it may be lost, as I have explained to you, in the ordinary business 
transactions of the company, without impairing the ability of the 
company to meet its obligations. 

Q. It may impair its ability, but still there may be funds on hand 
and its assets will meet its liabilities? A. Yes ; for instance, say a 
bank has $2,500,000 of assets and $2,000,000 of liabilities, it may 
lose $500,000 and still meet its liabilities; but if its liabilities were 
two and a-half million and its assets only that amount , then it could 
not meet that loss. 

By the Chairman : 

Q. Do I understand you to say the department makes any correc¬ 
tions in the returns after they are tiled, or are they any thing more 


t 


584 


M 

than arithmetical calculations ? A. The returns are made up with 
the liability to policyholders omitted; the blank has for many years 
stated, “ please don’t fill this blank in other words, the department 
won’t take our sworn statement as to what our liabilities are on our 
policies, hut exact from us detailed statements of our obligations that 
we have outstanding, and they themselves determine what that 
liability is ; so the Equitable Life Insurance Company has not reported 
those figures at $23,865,000; it is the department that has done so ; 
but there is a question in the blank which asks us, u are there any 
peculiar forms of policies, or peculiar styles of policies, which require 
any special consideration beyond the regular reserve of the policy; ” 
here is stated $4,109,000 surplus; that is the amount over and above 
what the department makes the legal liabilities of the company; the 
company says $1,000,000 of that surplus belongs to a specific class 
of policyholders, and $3,000,000 belongs to another class of policies 
—$1,000,000 belongs to the Tontine policyholders as designated 
from the non-Tontine, and $3,000,000 belong to the non-Tontine 
policyholders as distinguished from the Tontine policyholders; the 
Tontine policyholders have no interest in the $3,000,000, and the 
non-Tontine policyholders have no interest in the $1,000,000; we 
hold $4,000,000 of surplus; $3,000,000 belongs to the non-Tontine, 
which is in fact apportioned, and $1,000,000 belongs to the Tontine 
as a class not apportioned. Why don’t they apportion it ? Simply 
because'no man can tell whether John Smith, holding $10,000 now,, 
will ever be entitled to one dollar or a mill of surplus, that is, of the 
million dollars surplus ; it may all be lost in the transaction of the 
company’s business before the time comes to apportion it; I have 
some ingenuity, but I could not devise a plan by which you could, 
get the information, supposing it to be correctly stated, any more 
explicitly than you get it there; mind you, the company has nothing 
to do with filling in those figures of the legal liability; the depart¬ 
ment does it themselves, and these figures are their figures, and the 
$4,109,000 are their figures ; they say it is a liability to the policy¬ 
holders ; why ? because it belongs to the policyholders; it is distin¬ 
guished from the legal liability because it may be lost in the com¬ 
pany’s business without impairing the company’s ability to pay; but 
they go further, and say it belongs to two different classes of policy- 
holders ; $1,000,000 to one class and $3,000,000 to another class ; 
supposing it to be correctly stated, they give you all the information 
it is possible to derive from the books of the affairs of the company; 
have I made myself understood ? 

By Mr. Hosted : 

Q. I would like to ask you one question as to your judgment of 
the effect of legislation in reference to surrender values ? A. Well, 
perhaps, it is better to give you a little experience on that score; 
the business of life insurance will correct itself, if let alone ; the 
regular competition in life insurance will regulate surrender values, 
if let alone, and the tendency will be among companies to go too far 
in their liberality rather than not far enough; go back twelve years* 


585 


to the time when life insurance companies were organized so rapidly 
in this country; you will find each company had its own scheme for 
surrender values; had its new plan more attractive than the com¬ 
panies doing business for years; that was their advertizing dodge, as 
they call it; some gave their policyholders more liberal surrender 
values in that way, but some of them went straight into the ground ; 
what is the result of it? the older companies cfid not follow their 
lead, and what was the result of it? the wrecks that strew the path¬ 
way of life insurance to-day is attributable to that as much as any 
thing else. 

By the Chairman: 

Q. Is that due to paying too high values or to not paying any at 
all ? A. To paying too high a value, putting too liberal provisions 
in the contract; the trouble of insurance is this; we will say there are 
20,000 people in a company who say we will contribute to a common 
fund among each other a sufficient sum to pay the death losses of 
those who die ; it is just as impossible to determine to-day at the start 
the fair amount you will pay to a man twenty years from to-day who 
wishes to go out then and not complete his contract, as it would be 
for ten r^eii who entered into a partnership to-day to determine how 
much they will pay each man if he wanted to go out; you must de¬ 
termine each case as it arises. 

By Mr. Coulter : 

Q. You say it is possible they paid too liberally; do you suppose 
there is any danger of it ? A. It has been the experience of the 
past that they have been paid too liberally and they can’t live up to 
it. 

Q. Which ones have done it ? A. Take those which have failed, 
and you will find two-thirds of them have done it; that is a subject 
you have got to leave to the experience of the companies from time 
to time; as I said before, the competition of the business will regu¬ 
late that, just as competition will regulate any other business. 

By Mr. Moak : 

Q. At whose expense will it be regulated ? A. A life insurance 
company will pay as much surrender value as they can prudently do 
and as the demands of people press upon them, just as merchants sell 
goods on as reasonable terms as they can to induce people to patron¬ 
ize them ; life insurance companies look for patronage at the hands 
of people and must have it to be successful. 

By the Chairman : 

Q. Is it not a fact that premiums paid in early years are more than 
necessary to protect the company in those early years? A. Yes, 
provided so many of the policyholders did not drop out; the good 
lives, as a rule, drop out and leave a large preponderance of bad lives 
in the company; that can only be determined by the experience of 
time. 


♦ 


586 


<Q. What is your experience as an insurance man, and what is the 
experience of your company, as to the length of time a party will 
remain in the company ? A.. That depends to a great extent upon 

the company and the standing of the company. 

Q. Wli.it is the average? A. I could not give you the standard ; 
it is all the way from seven to twelve years; the amount a company 
can afford to pay as a surrender value at a particular time is governed 
by the mortality; the mortality in the Mutual Life is not more than 
half as great as in other companies where good lives have dropped 
out from some cause. 

Q. Is it not also determined by the care with which risks upon 
lives are taken? A. No, that does not necessarily follow ; if 10,000 
lives are taken in a company, and that company goes on and pays 
large dividends, the good lives are more likely to keep up, and its 
mortality is lighter than a company which goes the other way ; if 
you fix the amount by law which a company shall pay, that company 
will be likely to pay less, while the company that can afford to pay 
less will havrn to pay more. 

Q. Has not the care with which the risks are taken a great deal to 
do with the mortality ? A. Y es, sir. 

By Mr. Husted : 

Q. You mean to say it is somewhat upon the principle followed 
by depositors in the savings bank ; they will put their money in when 
the bank is bung up, and draw it out when they are not? A. You 
can no more fix it by law than you can fix what dividend it should 
pay. 


By Mr. Moody : 

Q. You are aware that many of the lire companies have a table 
attached to the policy, and the policyholder can figure himself the 
amount he will receive in case he should.see fit to cancel the policy? 
A. Yes 

Q. AYell, that was a matter of loss, and they are liable to losses 
the same as life companies ; why may not the same rule apply to life 
policies, so that there can beatable attached to a life policy showing 
the amount to be paid for the surrender of the risk at any time ? A. 
Fire insurance risks are predicated upon losses upon certain build¬ 
ings; if you insure to-day 10,000 dwelling houses, and say you 
charge a-half of one per cent, if you please, and at the end of six 
months one-half of those persons who insure those dwelling houses 
see fit to cancel their policies, you would not expect any larger per 
centage of loss on the remaining 5,000 than you would have had on 
the whole 10,000 if the policies had continued in force, that is, any 
larger per centage on the whole number than you would have had 
before; if 10,000 lives were insured to-day, and get policies for ten 
years, and keep them up for that time, and then 5,000 of those lives 
surrender, or policies are surrendered on 5,000, there has been going 
on all this time a deterioration in the lives, and the 5,000 that remain 
on the books of the company are liable to be, indeed are sure to be 


587 


the worst lives, while the 5,000 best lives are gone, and the percent¬ 
age of mortality on the 5,000 that remain in is more than the per 
centage than those that go out. 

Bv Mr. Wei ant: 

*/ 

Q. Well, can it be done ? A. No, it can’t, and for the reason that 
I have given. 

By the Chairman : 

Q. I understand vou to say that the lives which go out are the best 
lives ? A. Yes. 

Q Is that, or not brought about by financial inability to pay pre¬ 
miums in times of financial depression; would it not be those 
straightened by financial circumstances, and caused probably by ill 
health, who would drop out, and therefore would they not be likely 
to be in bad health ? A. Experience says no, and I can only speak 
by experience; that is illustrated by the mortality of the Mutual 
Life, and companies conducted on the principles of the Mutual 
Life. 

Q. Can you not tell what the experience of the company is, as to 
how many remain in to the age of sixty ? A. That depends entirely 
upon the age at which they go in, 

Q. What is their experience ? A. I could not tell you that; in 
one insurance company they would go in at fifty-five, and another 
company a man was insured at twenty-five. 

Q. Of those insuring for life, how many remain in for life to the 
age of sixty ? A. Do you mean the per centage of those who in¬ 
sure ? 

Q. Yes? A. That I can’t answer; that is a calculation I don’t 
suppose any company ever went into. 

Mr. Homans —The Mutual Life has statistics on these points, 
which will give you the figures; it is a book called the Mortuary 
Experience. 

By the Chairman : 

Q. It is a fact, is it, as you understand it, that the chance is a 
small number remain in, comparatively, of the insured, to the age of 
sixty ? A. That depends altogether on those insured; if you should 
ask me of those who went in at twenty, how many remain in up to 
the age of sixty, I should say the per centage was very small, in¬ 
deed. 

Q. What is the average rate of companies for commissions for 
insuring parties ? A. That entirely depends upon the companies 
and its management. 

Q. What is the average time or continuance of policies in com¬ 
panies ? A. I should say the average is from seven to twelve years; 
different companies average different times. 

Q. A statement was made here that in this country it is not over 


588 


five', and in England seven years ? A. I can’t tell wliat the state¬ 
ments of other people are ; I can only tell my own experience. 

Q. In making the estimates of the duration of lives, do the compa¬ 
nies make it on their own experience, that they have in their own 
company, and if they have a considerable proportion of impaired 
lives, and if the proportion increases as the lives pass on, is not the 
rule upon which that statement is based a more unfavorable one 
against the insurer than the actual fact in ordinary lives would war¬ 
rant ? A. I don’t know as I get your meaning. 

Q. I understood you to state that the experience of companies 
showed that impaired lives remain in rather than good lives, or a 
greater proportion, and that companies calculate or estimate the 
duration of lives by their own experience, so that its experience and 
that of other companies, as a rule, would determine that matter ? A. 
Yes. 

Q. That being the fact, is not the rule which companies establish, 
based on their own experience, a more unfavorable one than they 
should establish, based on the actual facts of life ? A. I think not; 
I think the rules of the company, especially for the payment of sur¬ 
render values, is quite as liberal as the financial ability of the com¬ 
pany would enable them to be. 

Q. Don’t they estimate for contingencies and unhealthfulness, 
which may not occur for a thousand years ? A. You mean epi¬ 
demics. 

Q. Yes? A. Nothing of that kind is taken into consideration ; 
the companies here make their rates and conduct their business on 
the table calculated by Mr Homans, known as the American Experi¬ 
ence Table, which I would say is made up mainly from the experi¬ 
ence of the Mutual Life; for all we pay upon insured lives that we 
lose in that way, I think the question of epidemics in this country 
has had very little influence on insurance rates ; as a rule, persons 
liable to be carried away by epidemics are rarely insured, and if you 
could make a calculation of every person who died during an "epi¬ 
demic and deduct them from Mr. Homans’ figures, it would hardly 
change those figures. 

Q. Is it not the practice of a company, in estimating paid-up 
policies, to estimate for the maximum life of a party, rather than for 
the average duration of lives ? A. What do you mean by a maximum 
of lives? 

Q. Don’t they estimate that duration of life at over ninety ? A. 
Well, I don’t know as I can answer that question ; I don’t know to 
what it relates, either; in getting at the amount we should pay upon 
the surrender value of a policy, we calculate that there is so much 
reserve upon the policy; in other words, a man has paid into the 
company such an amount in excess of what it would be proper to 
charge him for his insurance for the time he has had it. 

Q. Why does that not belong to him? A. Simply for this reason, 
that this is a partnership ; this year we may have a very light mor¬ 
tality ; this year we may have a mortality less than the tables, com¬ 
panies in their rules prepare for a mortality which exceeds it; next 


589 


year we may have a far heavier mortality, as the lives we have in to¬ 
day may discharge more mortality than ten thousand other lives; 
the mortality in no two companies is alike ; no one can alter the 
variation of the tables in order that they shall be exactly alike, and 
in order to get the tables at all, yon have to get the next equitable 
ratio, so that no larger per centage of loss shall be incurred in one 
company than another; in other words, the mortality regulates the 
amount the company shall give for surrender values, just as it regu¬ 
lates the amount that shall be given for dividends, the desire being- 
to be actually equitable to all, or to be based on the presumption that 
all companies will experience the same mortality. 

Q. Don't you, in estimating the probable duration of a man’s life, 
estimate it at the maximum duration rather than the average 
duration ? A. We oidy know of but one duration of a man’s life, 
and that is the duration according to the mortality tables; we don’t 
take an hour more or less; it is the human expectation for all to 
die. 


By Mr. Moody : 

Q. Would not that same rule apply so far as fire companies 
are concerned, that they consider in insuring dwelling houses so 
many will burn, and in insuring factories that so many 
factories will burn, and on that they base their premiums ? 
A. Yes, sir; I will explain this point by a fair illustration ; the 
difference between a fire policy and a life policy is simply this, a tire 
insurance policy terminates at the end of a year or five years, at the 
furthest; suppose a fire insurance company should insure 10,000 
dwelling-houses upon the same terms we insure a man’s life, that is 
the owner of each dwelling-house may or may not, at his own option, 
continue that risk at the same amount for each succeeding year, for 
100 years if you please, or until it burns, they would have to charge 
more than they do charge, and more than we would charge; that is 
they would charge a higher rate per annum than they would be will¬ 
ing to insure it for if they were going to insure it for one year; 
because to-day it stands detached, alone by itself, and they take the 
risk of some one putting up some special building beside it in the 
future; just as we take the risk on a man’s life of consumption 
developing the next year ; it is optional in him keeping up the poli¬ 
cy, but in fire insurance if anything occurs to increase the risk the 
company has the right to reject it; if a fire company makes a con¬ 
tract for a certain number of years optional with the insured, it 
must calculate all risks ; but before a life company can calculate the 
value of a surrender policy, it must calculate its lives on a different 
basis from that which a fire company uses. 


By Mr. Husted : 

Q. And does not this vital question enter into it, that all men 
must die, and houses must not necessarily burn ? A. Yes, sir. 


590 


By Mr. Moody : 

Q. But do not fire insurance companies in arriving at their rates 
calculate that the house will burn ? A. Probably they do ; we could 
insure 10,000 lives for a single"year and charge a certain amount, and 
could fix in the policies an amount that we would give that man for 
the surrender of this policy at the end of three, six or nine months, 
just as a fire insurance company can ; we could insure 1,000 lives for 
one year, leaving it optional with] the company to continue it, and 
fix the same surrender value; for instance, giving him so much of 
his premium at the end of six months, or nine months, as the case 
might be, if he did not choose to continue it; but when we agree to 
insure a man, each year leaving it to his option, and increasing risks 
each year at a fixed premium, we must wait for the experience of 
future years before we can determine what we can give back to the 
man from the surplus of the premium he has paid, and keep the 
company secure; any attempt to fix it to-day would give some com¬ 
panies too small an amount and others too large an amount, and so 
bring about their ruin. 

By Mr. Weiant : 

Q. You have stated what you deem to be the cause of the failure 
of life insurance companies; have you any remedy? A. I stated 
that that was one of the causes of failure. 

Q. Have you any remedy to suggest ? A. I don’t know as I have 
any remedy to suggest for that, except that the companies should 
not agree to do anything further than to give an equitable surrender 
value, according to the experiences of the company. 

Q. Do you mean to say that this state of affairs must continue between 
the companies and the policyholders ? A. If I were going to put a 
clause in that bill, I should put the same one in that the gentleman 
talked of, that after the payment of two or three annual premiums 
the company will give a paid-up policy for a certain amount as the 
equitable value of the policy, determined "from experience, will pur¬ 
chase, and, as Mr. Fackler says, the company, with a clause of that 
kind in its policy, could be forced in the court to give as much as it 
could equitably. 

Q. I understood you to say one of the chief causes of failure was 
the competitive manner of doing business upon basis that were not 
safe? A. Paying such surrender values on their policies that it was 
unsafe for them to pay ; I said that was one of the causes. 

By the Chairman : 

Q. Don’t you think that taking careless risks is one of the causes ? 
A. Certainly it is, and expensive management is a cause. 

Q. If the death rate in one company is twenty-six in a thousand, 
is it not a sign that it is in a bad condition ? A. Oh, yes. 

Q. What is the average amount of death? A. It "depends upon 
the length of time the company has been in existence and the age of 
its policies; a company may reach that time when its losses will 
reach fifty in a thousand. 


591 


Q. And still be in a good condition? A. Perfectly solvent; sup- 

f osing it lives to a time, or lives to be sixty years old, for example, 
think at that age the mortality would be sixty or seventy. 

Q. Would there be any objection to this form being introduced: 
If, after premiums on this policy for not less than three complete 
years shall have been duly received by them, said policies shall cease 
in consequence of non-payment of premium thereon they will, on 
the surrender of this policy duly receipted and the payment in cash 
of any loans, credits or indebtedness outstanding against this policy 
—then outstanding against this policy—at the end of thirty days the 
company will give a surrender value amounting to all the premium 
paid? A. Yes; it is unjust to all policyholders to put that clause in 
a policy, and I will explain the reason to you: a person insures at 
the mutual rate at the age of sixty, under a policy of that kind, a 
man sixty years old at the start , who had paid ten years premium 
upon Ins policy, if he should demand a surrender value of his policy, 
he would be entitled to receive from the company a paid-up policy, 
the reserve of which will be more than twice the reserve of his 
running policy, while at twenty-live he would get a paid-up policy 
for very much less than the company could afford to pay, and much 
less than the company have been in the habit of giving; I know a 
case where a man came to a company and his original policy was 
$1,000, and he demanded a paid-up policy of $1,200, and got it 
because his premium exceeded the face of his policv ; it would per¬ 
haps be equitable and just to half a dozen ages; those older would 
get more than they are entitled to, and those younger would get less 
as the age raised or went up. 

Q. As a rule you succeed better and more equitably, you think, 
by leaving it to the company to determine? A. Yes, certainly; it 
is like a-half dozen men going into partnership and saying we will 
determine our profits when we know what they are and not now; if 
you put a certain value on the policy, less than the company can 
afford to pay, it amounts to nothing ; if you fix the rule higher than 
the company can afford to pay, you break the company and the 
policyholders lose. 

Q. But the companies have been doing that? A. Yes ; and I say 
one cause of the misfortunes of the life insurance companies has been 
the tendency to put that too high, which generally is the tendency 
of competition, that is to do as much as the companies possibly can. 

Q. And you say there is no remedy ? A. Yes ; I say there should 
be put in a policy a surrender clause to the effect that after the pay 
ment of two or more premiums a policyholder should be entitled to 
a paid-up policy for such a sum as his portion of the reserve or excess 
that he has paid will equitable purchase in accordance with the ex¬ 
perience of the company. 

Q. Do you suppose any policyholder will understand any such 
provision ? A. No, he cannot understand it, because no living man 
can tell what it will be ten years from now. 

Q. Then you don’t think*it can be fixed? A. I don’t think it can 
be equitably fixed, so as to reach every policy. 


592 


Q. You can determine it? A. Certainly you can equitably deter¬ 
mine it. 


By Mr. Moak : 

Q. What would you say to a law requiring insurance companies 
to deposit their reserve in security ? A. It would be a very safe 
law for the policyholders, but I doubt if you can get a company to 
do business under that law ; you must require all the policies to be 
registered. 

Q. Require all companies doing business in this State to make a 
deposit ? A. There may be many inconveniences of great magni¬ 
tude that would result from it; for instance, the company starting in 
life insurance would not be safe to start with less than $2,000,000, if 
it was going to do anything. 

Q. I understood you to say the other day, that where a policy con¬ 
tained a clause, that in case the assured omitted or ceased at any 
time to pay, after paying, for instance, three or five premiums, then 
that policy should operate as a paid-up policy for three-tenths of the 
amount insured ; that you would call a liability would you not? A. 
The reserve on it would be a liability. 

Q. And you would call the reserve on that policy a liability? A. 
Yes. 

Q. Suppose a policy provided that the dividends as declared by 
the company might be applied by the company to increasing the 
amount of his insurance, that you would call a liability ? A. If it 
was so declared. 

Q. If he applied it to that purpose, you would not regard the sur¬ 
plus on that as applicable to pay the loss on another policy, would 
you ? A. Oh, no. 

Q. Say a couple of years ago, let me see whether the same direc¬ 
tors were directors in the Universal and Equitable ; was Mr. Walk- 
ley a director in both ? A. Yes. 

Q. Mr. Andrew Alexander; was he a director in both ? A. Yes. 

Q. Mr. William G. Lambert ? A. Yes. 

Q. Mr. Halstead ? A. I think he was, yes. 

Q. Mr. Henry Day ? A. Yes. 

Q. Mr. S. W. Torry? A. Ho; I don’t know as to him. 

Q. Mr. Marquand ? A. Yes. 

Q. Mr. H. H. Hill ? A. Yes. 

Q. Mr. Ashwell H. Green ? A. Yes. 

Q. Mr. Edward W. Lambert ? A. Yes. 

Q. Was Mr. Lambert medical examiner in both companies? A. 
Yes, sir. 

Q. In December last what salary were you receiving as president 
of the North America ? A. Twelve thousand collars. 

Q. What salary as vice-president of the Universal? A. Twelve 
thousand dollars. 

Q. How much as an officer of the Guardian? A. Nothing. 

Q. How much as financial agent of the Charter Oak ? A. I went 
into that thoroughly the other day ; $8,000. 


593 


Q. You were receiving nothing from any source 
dian? A. No, sir. 

Q. You never have been an actuary, I believe ? 
been a professional actuary. 

Investigation closed. 



from the Guar- 
A. I never have 


594 


Hon. James G. Graham, Chairman of the Insurance Committee 
of the Assembly of New York — 

Dear Sir: I am profoundly astonished at the apparent termina¬ 
tion of the taking of further testimony before your committee, and 
cannot now but believe that the pressure brought to bear to termin¬ 
ate these proceedings has proven more powerful than the power of 
virtue in some of the committee to resist the temptation to assent to 
the closing of the investigation. Mr. Chairman, it seems to me the 
desire to terminate these proceedings is as strong on the part of some 
members of the committee, as on that of the officers of some of 
the companies, who have been under such a distressing examination. 
When, Mr. Chairman, a question is voted down that leads to the 
very vitals of mismanagement and the cauldron of corruption now 
existing in some of our companies, then the motive for such voting 
may well be questioned. When it is shown that a man receives a 
salary of $2,500, and a per centage sufficient to increase the amount 
received only about as much more; when, I repeat, it appears that 
this man,with this small income, suddenly commands a credit where¬ 
by he obtains a certified check for $330,000, and when it is shown 
that this man is the custodian of millions of trust funds belonging 
to policyholders, to whom he is to render an account, it is indeed a 
strange condition of affairs if this man cannot be asked the question 
as to how he obtained the money wherewith he secured a credit of 
$330,000. Now, Mr. Chairman, let me give you a brief history of 
this man’s career in connection with life insurance. Originally, I 
believe, he started in Green Bay, Wisconsin, as local agent (such are 
generally very poor) of the “Universal.” He rose to general agent, 
I understand; was again promoted to be superintendent of agencies 
in same company, and finally became their vice-president. He is an 
able man, an exceedingly able man ; but when he claims to have 
originated the idea of absorbing the companies, and, if left alone, 
would have saved them, etc., etc.,—beautiful, very beautiful,—when, 
I repeat, he says he originated the idea, I question the soft assump¬ 
tion. In 1868, before this gentleman appeared in New York, I be¬ 
lieve, I was approached by Mr. W. F. Hall, then my partner, and 
an intimate associate of Mr. John E. DeWitt, the managing 
director of the “ Phoenix Life” at New York City, to enter into 
a scheme to get control of the stock of some of the shaky com¬ 
panies, and absorb them. I refused to engage in such a transac¬ 
tion, and denounced the scheme, and all engaged in it. A 
few years after this (in June, 1871), I was out of employ¬ 
ment. Mr. Fred. Freeman, secretary of the “ Mutual Protec¬ 
tion Life,” button-holed me in front of his office, and said 
he wanted to employ me. I told him I did not think he 


595 


could afford to employ me; I told him it w-s only a question ol time 
when his company would go down. He answered that I did not 
know what was in contemplation and half confided his plans to me. 

I did not need a half confidence, and think I told him so, for I had 
heard of the sale and purchase of some of the stock of the “Wid¬ 
ows and Orphans' Life" bycertain parties, and suspected their game. 
Mr. Freeman told me that he needed me, and intended to have me, 
offered to alloiv me my own terms. I told him that his company 
could not afford to pay me what I felt I was worth, and that the 
services I could render him were not worth a dollar. I have not 
spoken to him from that day to this. In November or December of 
that year (1871) I heard of the consummation of their little scheme, 
that of reinsuring “The Widows and Orphans” in the “Mutual 
Protection." I wrote an article whicn was published in the “ Balti¬ 
more Underwriter of November or December, 1871, entitled “New 
Tricks in Jockeyism.” This article and some others I am informed 
Mr. Freeman testified before an Insurance Committee here, had 
killed his enterprise. That was the intention of the article. 

Now, Mr. Chairman, this is a grave and responsible question that 
you have before you affecting the sacred funds of prospective wid¬ 
ows and orphans. It is now r in the keeping of such witnesses as 
have appeared before you, and I earnestly appeal to you, nay, im¬ 
plore you that this matter now fairly begun, may be continued until 
the frauds and corruptions are laid bare and the protection of these 
sacred trusts be secured beyond peradvcnture so far as lies within 
the powder of the law r . Mr. Winston, president of the “Mutual Life,” 
(a model company), when the w r ar was raging between his company 
and the “ Equitable,” made use of an epigrammatical remark which 
appears to me pertinent to this occasion. He said, “that the strug¬ 
gle in the future w r ould be between conservatism and audacity.” It 
remains wdth you whether audacity comes off the victor. 

I do not desire, Mr. Chairman, to record in writing all the infor¬ 
mation upon rumor that has come to my knowledge, but this I 
will say, that you and Mr. Moak, counsel for the committee, thought 
it well for me to go down to New r York on Friday, March 80tli, to 
secure such information as might lead to such proof as you needed. 
I did so, and trust I did my duty. You, Mr. Chairman, I believe 
instructed Mr. Wilsie to see me on the cars, 2.40 train, and get from 
me such names as I thought would be useful. I failed to find Mr. 
Wilsie on that train, or on Saturday or Monday following at the 
places you informed me he was to be found. Again last Thursday I 
w'ent to New' York on a similar errand. I met Mr. Wilsie and told 
him I had two important witnesses to summon, and gave him their 
names. They w r ere Mr. James L. Ryan, 137 Broadw r ay, N. Y., ior- 
merly General Superintendent of the “ Equitable," and claiming to 
know the true inwardness of that institution; and Mr. James L. 
Anthony, 34 Pine street, New York, who professes to know a great 
deal of its workings. 

The information Mr. Ryan had to give is this; lie 
(Ryan) told me that he saw^ Mr. James W. Ilusted receive a check 
from the company, drawn and made payable to his (Mr. J. W. Hus- 
38 


596 


ted’s) order, in settlement of a contested claim which the company 
had repudiated and had refused to pay. The beneficiary of said 
policy was of one Lovett, of Palmyra. N. Y., and that this is, I un¬ 
derstood from him (Ryan), only one of many things within his 
knowledge connecting Mr. Ilusted with the “Equitable” and other 
companies. Now, Mr. Chairman, the honor of the committee is at 
stake, also the reputation of the honorable gentleman above named. 
When such things can be charged against a member of your honor¬ 
able committee, and in my humble opinion the Legislature and the 
committee should remain in session and sift to the very bottom this 
foul nest of corruption or otherwise scandal. I hope they will “fight 
it out on this line if it takes all Summer.” For myself 1 have no 
favors to ask, and surely nothing to fear. I am simply doing what 
in my opinion your Superintendent of insurance should do, at least 
I am trying to do so, i. e., point out the evils that surround life in¬ 
surance. I have the honor to be 

Your obedient servant, 

W. S. MANNING. 

Albany, N. Y., April 12th, 1877. 


New York, Ajyril 16^4, 1877. 

Hon. James G. Graham, Chairman of the Insurance Committee , 
N. Y . Assembly , Albany , Ak Y. 

Dear Sir : I hand you the name of Mr. Charles E. Brown, Park 
Bank Building, 214 Broadway, New York city. Mr. Brown this 
moment informed me that Mr. Henry J. Furber, by his contract 
with the Charter Oak Life, was to receive, did receive, and he 
believes does receive now $15,000 per month from the Charter Oak, 
to be applied towards cancelling the loan or advance made to the 
company by said Furber, the amount of said advance being as stated 
$500,000. 

This information, Mr. Brown states, was communicated to him by 
Mr. E. R. Wiggins, now president of the Charter Oak Life. 

Yours truly, 

W. S. MANNING. 


Hon. James G. Graham, Chairman of the Insurance Committee of 
the N. Y. Assembly , Albany , Ak Y. 

Dear sir: Judging from the statement of the Equitable recently 
published, and which received the endorsement of the Superintendent, 
IJon. John F. Smyth, it seems to me imperatively necessary that the 
standard of reserve now legal in our State be immediately changed 
if there is to be any regard for the future solvency of our companies. 

I cannot see how, by any possible chance, the'Equitable can pass 




597 


the Massachusetts’ valuation, or their standard of the combined 
experience, with rate of interest at four per cent; nor do I believe, 
if our Superintendent had valued the real estate of the u Equitable” 
at any fair valuation, absolutely at the market valuation, also the 
true valuation of other assets, such as the stock of the Mercantile 
Trust Company, that the company could have passed even our useless 
standard of four and a half per cent American experience ; nor does 
any true insurance man capable of giving an opinion differ with me. 

The Superintendent makes the surplus of the Equi¬ 
table to be . . . . $5,337,938 41 

Deduct for Tontine liability, Fack- 

ler’s valuation . . $2,201,500 00 

Deduct for profits' on lapsed Ton¬ 
tine policies. . . . 600,000 00 

Deduct for shrinkage on real estate 2,500,000 00 

Deduct for shrinkage on Mercantile 

Trust stock, etc., say . . 500,000 00 

-$5,801,500 00 

If this estimate is true then even by the N. Y.- 

standard this is the deficiency . . . $463,561 59 


Such an alarming condition of affairs plainly points out the duty 
of the Legislature which is to repeal the law regarding the rate of 
interest, and indeed the table rates of mortality, and adopt the com¬ 
bined experience and rate of interest at four per cent. My reasons 
for my preference for this table over that of the American experience 
is, that it gives a larger rate on the younger lives 'which covers most 
of the insurance placed, and a smaller rate on the older lives where 
the less amount of insurance is placed. The American experience is 
just the reverse. Hence I say, if we err at all, it is better to err on 
the safe side; therefore, if you correct the standard of reserve, and 
bring it back to the combined experience with the rate of interest at 
four per cent, you will at one blow create good companies and root out 
the bad ones. Cast your eye over the condition of the Massachusetts 
companies (barring their manner of investments), and you will see 
they can court investigation, not shun it. 

No superintendent is called upon to write “ can any data be fur¬ 
nished within two weeks, which would be satisfactory enough to be 
presented to Mr. Hill, which would head off this demand for an ex¬ 
amination.” When our superintendent stoops so low as to ask such 
a question of a company, or in any way to collude with them, either 
to embellish or doctor a statement, then indeed there can be but one 
of two conclusions, either that he is incompetent, or worse than in¬ 
competent. 

I have the honor to be your obedient servant, 


Albany, N. Y., April 23d, 1877. 


W. S. MANNING. 







598 


Albany, N. Y., April 20, 1877. 

Prof. Elizur Wright, Boston , Mass .— 

Dear Sir: I enclose herewith copies of two communications to 
Hon. James G. Graham ; the one dated March 24,1877, was written 
at the request of Mr. Graham, who is chairman of Assembly Ins. 
Committee. I would be glad if you will criticise it, and if you will 

f ive me your candid opinion as to my views, and do not spare me. 

ou may remember I called on you in January, 1876, about the 
middle of the month, and yon had a long talk with me, mostly about 
the Equitable. You then stated it, as your opinion, that the Equit¬ 
able woulld be the first large company that would go down, in which 
opinion then (and now) fully concurred. 

I have been here in Albany, fighting a terrible battle, and, I 
might say, all alone ; that is, no insurance man has been bold enough 
to come to my assistance. I was the first one to pronounce the Ton¬ 
tine accumulation or fund a liability, and caused both Mr. Homans 
and Mr. Fackler to admit, as actuaries, that it was undoubtedly a 
liability. The statement of the Equitable shows, even by the N. Y. 
standard, that the company could not pass if a just appraisement was 
made of its real estate and other securities, such as the stock of the 
Mercantile Trust Co., about $1,500,000; which company, as you 
know, or rather may have heard, is nothing more or less than the 
Equitable organized to evade the law, and invest the funds of the 
Equitable indirectly, outside of the State, even down in Texas, and 
the West, and South. If the Equitable goes down, so will the Mer¬ 
cantile Trust Co. Take the shrinkage on real estate, which, by no* 
fair estimate, can be less than $2,500,000, and the Tontine liability 
$2,201,000, and about $600,000 for lapsed Tontine policies, and say 
if the true valuation of the Mercantile Trust stock is placed at 75 
per cent, there would be, in round numbers, a shrinkage of $400 r - 
000. It is plain to see that, by a proper ruling, the company could 
not pass even this State, and, I understand, they intend to pass your 
State. If so, I will never have faith in old Massachusetts, the home 
of my fathers. 

In my letter to Mr. Graham of the 12th inst., you may gather 
somewhat as to how matters have been choked off here. 

My object is to purify life insurance, if it lies within the power 
of one man. Write to me here, if you will do me that honor. Ad¬ 
dress, No. 186 State Street. 

I am, with great respect, yours truly, 

(Signed), ' W. S. MANNING. 


599 


Elizur Wright, Consulting Actuary , Room 5, 
New England Life Insurance Building , 
Post-Office Square. P. 0. Box 109. 
Boston, April 21, 1877. 

W. S. Manning, Esq. 


J- 


Dear Sir—I have received your favor of the 20th, and the two 
letters to Mr. Graham, all of which 1 have read with interest. I 
quite agree with you as to the standing of the Equitable. The white 
washing report ought to bring a change of management or shut it 
up. In much that you say to Mr. Graham I quite agree with you, 
but not as to whole hfe policies paid up or other, or as to cash sur¬ 
render values. The cash which a retiring member can withdraw at 
the end of any year, can be and ought to be as distinctly stipulated 
in the policy as the cash he is to pay for going on. Of course the 
charge on him should be such that the company cannot suffer by his 
going out. I gave my reasons for this in the “Transcript” the other 
day, and I see the “New York Insurance Age” copied. 

Nothing but this and keeping the insurance distinct from the 
self insurance will ever satisfy an intelligent public, Charieton E. 
T. Lewis, to the contrary notwithstanding. In haste. 

Yours truly. 

(Signed) ELIZUK WEIGHT. 


As the repo rt of the Insurance Department in regard to the 
Equitable Life Insurance Society differs so vitally from the views 
expressed in this volume, the publisher thereof deemed it only fair 
to said company to print their statement. He therefore offered to 
do so, making the same charge as was done in the case of other 
companies. Upon the company’s declining this offer, alleging as a 
reason that they did not desire to incur the expense just now, the 
publisher wrote them the following letter which has remained 
unanswered. 


No 98 Fifth Ave., Aug 17th, 1877. 

J. W. Alexander, Esq., Vice-President of the Equitable Life 
Insurance Company of New York. 

Dear Sir : I was induced by a sense of justice to offer to your 
company the opportunity of placing on record the report of the 
Superintendent’s examination, inasmuch as the enclosed matter 
which was laid before the committee will appear. 

If it is only a matter of expense that actuates you in declining 
my offer I will waive any charge, and will insert the statement if 
jou will authorize its insertion by a simple request. 

Yours truly, 

W. S. MANNING. 





600 


The following extract is from the testimony of Mr. Frederick S. 
Winston, which was taken October 20th, 1865, before A. B. Tappan, 
Beferee, appointed by the Supreme Court of the State of New 
York, in the case of Ebenezer Dale, &c., against Frederick S. Wins¬ 
ton, &c. This testimony may be 4 apropos’ in connection with that 
taken before the Insurance Committee, relating to the salary ques¬ 
tion, and particularly as to the charges against Mr. Winston, that he 
obtained his position through the use of proxies. Mr. Homans, in 
his testimony (page 520), states: “In 1853, Mr. Joseph B. Collins 
was President of the Mutual Life Insurance Company, and Mr. 
Winston, by securing proxies, was enabled to put nine new trustees 
in, and secure to himself the position as President.” Mr. Winston 
testifies in 1865 as follows: 

“ October 20, 1865. Mr. Winston’s examination continued. Mr. 
Buckham for creditors ; Mr. Tracy for defendants. 

Q. Are you prepared to comply with the request made at the last 
examination to produce statement of all monies received by you 
from the company of which you are President, for each year that 
you were President ? A. I have such statement; I believe it to be 
correct. 

Q. State the substance of it ? A. The salary is payable in monthly- 
instalments : 

From June 1853 to June 1855, 2 years, at $5,000 per year 


a 

1855 

a 

1858, 3 

a 

6,000 

a 

1858 

a 

1860, 2 

a 

8,000 

a 

1860 

a 

1862, 2 

a 

10,000 

a 

1862 

a 

1865, 3 

a 

12,000 


that is to June 1st, 1865. The extra compensation in that time is, I 
believe, less that $4,000 ; that is, during the twelve years; I think 
that is a little above the sum. 

Q. You have said that your salary as President ceased June 1st, 
1865 ; by what was this evidenced ? A. My election is from year 
to year; and this election usually takes place in the month of June, 
and when my salary is fixed, it is done at the time of election gen¬ 
erally. My office ceased at that time, and, although re-elected, no 
salary was fixed. 

Q. Was that done by your consent? A. The Board didn’t con¬ 
sult me in reference to it; the Board have always fixed such salary 
as they deemed proper, without any consultation with me, from the' 
beginning of my relations with the Board till now; I have never 
asked them for any sum for salary, or any increase of salary, but 
have left them to take their own judgment; I never sought the. 
position, nor asked anything in reference to salary. 

Q. Did the board, on any previous occasion of an election, omit 
to fix the salary of the president; if so, state on what occasion ? A. 
On several occasions, when the salary has been recently fixed, no* 


601 


mention has been made of the amount of the salary; I might say 
that the whole subject of salary was, on this occasion, referred to a 
committee. 

Q. Do I understand you to say, that the directors omitted, on any 
occasion, previous to June, 1865, at the election of president, to fix 
the amount of his salary ? A. They omitted in terms to fix it. 

Q. Has it been customary, at the election of president of your 
company, to fix the amount of the president’s salary ? A. Some¬ 
times it has; sometimes not. On this occasion the subject of salary 
was not fixed; but the whole subject was referred to a committee. 

Q. Was that subject ever referred to a committee before? A. I 
think it was once. 

Q. State the occasion ? A. It was early in the history of my con¬ 
nection with the board. 

Q. Do you know how it came to be referred to a committee on 
this occasion ? I think it came up on a request from some of the 
officers of the institution in reference to salary; the actuary, exam¬ 
ining physician, and other officers applied for an increase of their 
salary, which was granted; I did not unite in that request for rea¬ 
sons I have already given ; after fixing their salaries it was moved 
that the subject of a salary to the president be referred to some 
committee. 

Q. Were you consulted on that subject by the committee ? A. 
Ho, sir; except that one member of the committee has spoken to 
me on the subject afterwards; the committee consists of A. W. 
Bradford, John P. Yelverton, and J. G. Pearson ; I think that is the 
committee, but am not certain. 

Q. Have you any claim on the company, on account of your ser¬ 
vices ? A. None. 

Q. Did that committee report ? A. They have not yet reported ; 
there has been but one meeting of the board since then. 

Q. Are you still acting as president, without salary ? A. I am, 
as uch. 

Q. What is the amount of your compensation, since the first of 
June last? A. I have drawn for my expenses and had charged to 
my account, something over $1,000 a month ; the sum stands charged 
to me in account. 

Q. When was your last draft made? A. Within the present month. 

Q. Was that up to the first of the present month ? A. No, it 
included the present month. 

Q. By what authority did you draw salary since June 1st ? A. I 
have not drawn any salary since June 1st. 

Q. By what authority did you draw compensation ? A. I said to 
the Trustees, that I should be obliged to draw for my expenses, until 
the question of salary was settled, and I have done so. 

Q. To which of the Trustees did you so state? A. I think to 
Judge Bradford, and one other. 

Q. Was there any agreement or understanding express, or other¬ 
wise, that the fact of the discontinuance of salary should not effect 
your interest? A. No. 

Q. Is it not the fact, that the salary was discontinued, so that the 


602 


amount of it, or any portion of it, should not be reached on these 
proceedings, or any other proceedings against you, and yet the 
amount you would receive from the company would be equal to the 
amount of your salary ? A. Not that I know of. 

Adjourned to November 8th, at 2 1-2 r. m. 


November 8th. 

Q. Since your examination on 20th of October last, has any 
action been taken in reference to your salary or compensation, or 
has any action been proposed or talked of ? A. No, as to the first 
part of question ; as to the latter part, I don't know ; not with me. 

May 4th, 1866. Mr. Winston’s examination continued. 

Q. In your examination of October 20th, you said, “ it was moved 
that the subject of a salary to the president be referred to the same 
committee.” Who made that motion ; will the minutes of the meet¬ 
ing give the name of the mover of that resolution ? A. I don’t re¬ 
member ; sometimes the names of the mover of resolutions are en¬ 
tered ; sometimes not. 

Q. Since the 1st Wednesday in June, 1865, has any action been 
taken by the Mutual Life Insurance Company, or by the Trustees, 
or any of them, or by any committee, in reference to your salary, 
gratuity or compensation as president of said company? A. Not 
to my knowledge. 

Q. Have you at any time since June 1st, 1865, applied to The 
Mutual Life Insurance Company or to the Trustees thereof, or any 
of them, or to the committee on salaries, or either member of that 
committee to have the question of your salary settled and determin¬ 
ed upon ? A. I have already stated that upon this examination that 
I never applied to the Board or any committee of the Board for any 
salary or appointment whatsoever, rut have always left it to 

THEIR VOLUNTARY ACTION. 

Q. Since you so stated in this examination have you ever made any 
such application? A. No. 

Q. So I understand the question of your salary, as president of 
The Mutual Life Insurance Company, is still undecided, and has 
not yet been acted upon ? A. Not to my knowledge.” 


* 



603 


EXHIBIT 


EXHIBIT A. 


The Mutual Life Insurance Company of New York, ( 

New York, April 7, 1877. j 

Hon. J. G. Graham, Chairman — 

Dear Sir: I herewith furnish information requested by the com¬ 
mittee on the occasion of my examination: 

Total number foreclosure sales in 1876,109 ; bought by company, 
65 ; costs, disbursements and referees’ fees paid by the company, 
$23,700.49. 

Paid-up insurance, December 31,1876 : Policies, 16,549 ; amount, 
$36,200,775; reserve, $19,427,614 ; additions, $25,106,122 ; reserve, 
$13,807,080 ; reserve and loadings, $2,297,059 ; difference between 
reserve and surrender value paid in 1876, which is the money value 
of the vital deterioration by reason of withdrawal, $569,390. 

The foregoing contains answers to all the questions which I was 
requested to make memorandum of. I must apologize for the delay 
which has occurred, but I have been under such constant pressure as 
to be able, with difficulty, to find time even to write this letter. 


Yours res 



RICHARD A. McCURDY, 

Vice-President. 


































































[COPYRIGHTED.] 


e&Ateo?CA.Yfoit of *ms it$m$ 

Comprising the Gfross Assets of Life Insurance Companies, as coirtairiecl in the Report 

of the Snperinf encLent of Insurance of the State of New York, 

DECEMBER 31sl, 1876. 




Name of Company. 


Atlantic Mutual 

Brooklyn. 

Equitable. 

Germania. 

Globe Mutual. 

Home. 

Homoepatkic. 

Knickerbocker . 

Manhattan. 

Metropolitan. 

Mutual. 

New York. 

Provident Sav. 

United States. 

Universal. 

Washington. 

Western New York. 


Real Estate 
Owned. 


Total N. Y Co’s. 


# 16 , 677,817 62 


.ZEtna. 

Berkshire. 

Charter Oak. 

Conn. General. 

Conn. Mutual. 

C mtinental, Conn.. 
Hartford L. & A.... 

John Hancock. 

Mass. Mutual. 

Mutual Benefit. 

National of Vt. 

National, U. S. A.. 

New England. 

northwestern. 

Penn. Mutual. 

Pnoenix. .. 

Prov. Life & Trust. 
State Mutual, Mass. 

Travelers. 

Union Central, 0... 
Union Mutual, Me. 


$ 184,690 48 
217,676 98 
4 , 328,780 54 
160 910 00 
2 748,753 20 
264,624 89 
22.443 16 
50,928 96 
291,760 20 
286,383 14 
17,100 00 
404,850 00 
1 , 361,156 38 
577,153 91 
404,880 25 
257,883 16 
283,838 79 
50,000 00 
126,980 22 
74,851 00 
410,479 00 


IfBW YOU STATE OOMPAIfli! 


$ 30,000 00 
31,197 
5,462 319 
372,337 
784.161 
194.553 
40,651 
1.020 013 
206.85 L 
276,610 
4,246 245 
2 , 541,576 46 

46 . 724*92 
1 , 303,075 16 
121,500 00 


05 

26 

13 

12 

64 

99 

16 

56 

77 

40 


Total Cos other St'es $ 12 , 526,124 26 
Aggregate . li 29 , 203,941 88 


Per Cent 
of Total 
Assets. 

Bonds and 
Mortgages. 

Per Cent 
of total 
Assets. 

U. S. Stocks 
and 

Securities. 

Per Cent 
of total 
Assets. 

2.40 

$ 395,400 00 

31.58 

$ 229,737 50 

18.35 

1 27 

1 , 258,440 02 

51.10 

141.875 00 

5 76 

17.69 

16 , 015,142 98 

51,88 

1,817 032 50 

5.88 

4 71 

5 , 113,904 52 

64 65 

830,412 00 

10.50 

17.83 

1 616,085 35 

36.74 

716 392 50 

16.20 

4.11 

1 , 579.866 00 

33.40 

419,955 00 

8.88 

5.92 

333,098 18 

48.47 

192 050 00 

27.95 

14.76 

2 , 133,439 27 

30.87 

396 344 37 

5.73 

2.06 

5 , 040.160 29 

50.17 

1 , 023,568 88 

10.19 

12.89 

706,250 00 

32 92 

152.952 50 

7.13 

5.17 

1 60 , 856,200 18 

74.15 

7 . 907,340 62 

9.63 

7.66 

17 , 354,837 84 

52.33 

3 , 892,763 34 
112,406 25 

11.74 

85.64 

~97 

2 , 660,938 19 

55.40 

260,766 38 

5.43 

36.79 

1 , 036,091 50 

29.25 

132,000 00 

3.72 

2.35 

2 323,413 98 

44.91 

581,400 00 

11.24 

131,947 04 

66 92 

554 59 

.28 

8.32 

118 , 555,215 34 

| 

59.13 

$ 18 , 803,551 43 

9.38 

80 

$ 9 , 743,607 04 

42.01 

$ 377,128 75 

1.63 

6.73 

32 71 

1 , 767,740 63 

5 341,670 41 

54 63 
40.36 

542,900 00 

16.78 

12 65 

561,191 12 

44.11 

90 800 00 

7.14 

5 95 

27 , 815,839 34 

60 26 

2 402,509 00 

5 20 

7 89 

821,710 89 

24.49 

410,625 00 

12.24 

2 37 

763.746 44 

80.68 

4.078 00 

.43 

1 82 

1 , 437,810 00 

51.45 

111 285 00 

3.98 

4 55 

3 , 895,632 24 

60 78 

233,280 00 

3.64 

86 

12 615 948 45 

37.85 

3 , 830,247 50 

11.49 

83 

881,220 52 

42.47 

271,097 50 

13.07 

10 70 

2 376,663 16 

62.83 

466 643 75 

12.34 

9 39 

2 , 491,716 67 

17.20 

743 877 50 

5.13 

3 21 

11 . 605,627 99 

64.49 

339,873 88 

1.89 

6 87 

2 313,662 53 

39.24 

401,586 75 

6 81 

2 39 

6 , 195,955 05 

57.54 

274,387 50 

2.55 

7 94 

872,037 81 

24 40 

485 690 00 

13.59 

2 40 

159,359 00 

7.66 

358,215 50 

17.21 

4 37 

2 , 029,927 50 

69.79 

11,700 00 

.40 

5 80 

813 593 61 

63 05 

30,324 00 

2 35 

5.07 

4,820 386 76 

59 51 

231,350 00 

2.86 

6 06 

$99 325,047 16 

48 01 

$ 11 , 617,590 63 

5 60 

7.17 

217 , 880,262 50 

53.48 

30 , 421,142 06 

7.47 


Other Stocks 
and Bonds. 


$ 203,013 

398,000 

3 , 349,180 

847,100 

855,557 

827,625 

40,000 

120,900 

236,079 

201,910 

4 , 766,228 

6 , 418,282 


45 

00 

20 

00 

89 

00 

00 

00 

50 

00 

71 

33 


1 , 290,397 50 
25.000 00 
1 , 777,700 00 
5,050 00 

$ 21 , 362,024 58 


$ 6 , 953,386 28 
271,080 00 
223,815 00 
206,293 75 
3 201,720 00 
215 928 00 
46,180 00 
682,542 50 
381,942 50 
9,268 400 64 
623,970 00 
112,699 42 
6 , 880,858 18 
35,385 20 
1 , 568.157 73 
292,840 00 
979.924 23 
1 , 183.114 25 
453,975 00 
1,650 00 
338,875 00 

$ 33 , 922,737 68 
55 , 284,762 96 


Per Cent 
of total 
Assets. 

Loans on Stocks 
as Collateral. 

Per Cent 
of total 
Assets. 

Premium Notes 
and Loans. 

Per Cent 
of total 

J ssets. 

Cash in Office 
and Banks. 

Per Cent 
of total 
Assets. 

Deferred and 
Unpaid 
Premiums. 

Per Cent 
of total 
Assets. 

16.22 

$ 12,000 00 

.96 

$ 179,068 03 

14.30 

$ 162,548 71 

12.98 

$ 16,650 98 

1.33 

16.16 

12,200 00 

.49 

410,799 19 

16,68 

121.057 85 

4.92 

54,677 20 

2.22 

10.85 

1 , 981,820 00 

6.42 

.... 

1 , 269,316 48 

4.11 

663,421 00 

2.15 

10.71 

200,000 00 

2.53 


.... 

124,307 08 

1.57 

282,612 41 

3.57 

19.45 

109,598 70 

2.49 

51.068 83 

1.16 

37,621 66 

.85 

156,522 01 

3.56 

17.50 

362,600 00 

7.66 

1 , 074,514 72 

22.72 

132.234 74 

2.79 

115,261 86 

2.44 

5 82 

17,030 00 

2.48 

8,751 75 

1.27 

9,933 68 

1.45 

36,274 20 

5.28 

1.75 

65,200 00 

.94 

2 , 633,595 67 

38.11 

106,799 54 

1.55 

47,590 98 

.69 

2 35 

818,147 90 

8.15 

2 , 014,314 28 

20.05 

244,144 07 

2.43 

206,880 86 

2.06 

9.41 

96,240 74 

4.49 

365,689 26 

17.05 

21,002 53 

.98 

294,510 79 

13.73 

5.81 

19.35 


781,585 39 

2.36 

2 , 183,001 73 
1 , 427,933 18 

2.66 

4.31 

795,396 07 
446,178 04 

.97 

1.34 



329 38 

.25 

1.654 62 

1.26 

16,862 83 

12.85 

26 86 

41,500 00 

.87 

155,470 66 

3.24 

191.654 92 

3.99 

98,553 40 

2.05 

.71 

11,000 00 

.31 

767,162 22 

21.66 

154,528 71 

4 36 

80,739 11 

2.28 

34.36 


19,109 46 

.37 

116,654 18 

2.25 

180,429 95 

3.49 

2.56 



36,929 99 

18.73 

5,056 69 

2.56 

9,692 23 

4.92 

10.65 

$ 3 , 727,337 34 

1.86 

$ 8 , 498,388 83 

4,24 

$ 6 , 309,450 37 

3.14 

$ 3 , 502,253 92 

1.75 


Oil I 


29.98 
8.38 
1.69 
16.21 
6 94 
6 43 
4.88 
24 42 
5 96 
27.80 
30.07 
2.98 
47.49 
.20 
26 59 
2.72 
27.42 
56.84 
15.61 
.13 
4.18 

16 40 
13 57 


im 




$ 208,031 62 
60,953 33 
304.239 43 
24,265 95 
94,867 28 
88,770 00 
30,600 48 
52,950 00 
211,998 51 

47,100 00 
55,687 00 
378,221 62 

’ 148,876 05 
48,050 00 
666,294 25 
1,900 00 

7 , i 97 05 
24,551 44 


$ 2 , 454,554 01 
6 . 181,891 35 


•90 
1 88 

2 30 
1.91 

.20 

2.65 

3 23 
1.90 
3.31 

2.27 

1.47 

2.61 

2 52 
.44 
18 64 
.09 

' .56 
.36 

1.19 

1.52 


$ 3 , 798,115 42 
193,738 44 
2 , 541,609 20 
141,866 71 
6 , 290,699 45 
1 , 113,571 20 
7,000 00 
341,045 98 
894,548 25 
5 , 647,079 98 
35,554 17 
54,413 35 
2 , 057,775 87 
3 , 825,551 16 
740,053 64 
2,982 685 00 
97,289 30 
23,010 51 

’ 220 , 895'46 
1 , 884,466 24 


$ 32 , 895,969 33 
41 , 394,358 16 


16.37 

5.99 

19.21 

11.15 

13.63 

33.19 
.74 

12.20 
13.96 
16 94 

1.71 
1.57 

14.20 

21.26 

12.55 

27.70 

2.72 

1.11 

17.12 

23.27 

$ 15.90 

10.15 


$ 1 , 050,833 75 
61,148 52 
120,801 82 
43,304 46 
1 , 725,322 45 
180,530 90 
12,213 17 
3,328 71 
95,890 84 
800,077 46 
64,287 79 
133,948 00 
182,127 49 
702,008 38 

122,977 01 
413,217 98 
19,101 16 
293,444 37 
52,294 74 
40,730 43 
118,888 62 

$ 6 , 296,478 05 
12 , 605,928 42 


Interest Due and 
Accrued. 


Per Cent 
of total 
Assets. 


3.04 

3.09 


$ 167,655 18 
53,724 50 
81,926 17 
25,790 69 
35,414 68 
117,738 49 
18,806 88 
55,029 31 
157,230 62 
216,893 66 
24,426 49 
99,130 58 
150,129 53 
273,392 87 
105 520 73 
79,361 18 
148,048 76 

119,678 5 i 
37,753 32 
96,432 86 

$ 2 , 064,085 01 
5 , 566,338 93 


4.12 

2.93 

1.19 


$ 23,598 04 
34,452 39 
306,411 41 
139,435 60 
50,359 69 
23,511 98 
9,209 66 
374 832 30 
255,386 86 
27,611 12 
1 , 322,294 16 
292,082 51 

’ 57,325 55 
32,724 12 
53,071 26 
7,942 94 

$ 3 , 010,249 59 


$ 686,106 28 

66.558 91 
265,211 21 

17,876 17 
1 , 844,530 64 
141,620 88 

39.559 45 
59,308 37 

244,899 62 
671,386 19 
70,038 49 
72,666 46 
233,559 80 
576,478 00 

89,387 39 
224,037 59 
20,368 46 
12,350 00 
113,826 47 
63,286 90 
174,204 42 

$ 5 , 687,261 70 
8 , 697,511 29 


1.88 

1.40 

.99 

1.76 

1.14 

.50 

1.34 

5.42 

2.54 

1.29 

1.61 

.88 

i’.ib 

.92 

1.03 

4.03 

1.50 


All other Assets 


2.96 

2.06 

2.00 

1.40 

3.99 

4.22 

4.18 

2.12 

3.82 

2.01 

3.37 

1.92 

1.61 

3.20 

1.51 

2.08 

.57 

.59 

3.91 

4.90 

2.15 

2.75 

2.14 


Per Cent, 
of total | 
Assets. 


$ 7,730 37 
25,285 ii 

'’’iso 66 

12,256 25 
78 89 
2,415 50 

” 8,476 i 7 


.04 

.58 

.02 

.18 

’.ii 

’.03 


Total Gross 
Assets. 


$ 56,392 29 


$ 1 , 252,016 71 
2 , 462,698 70 
30 , 872,374 20 
7 , 910,108 74 
4 , 398,652 86 
4 , 730,122 94 
687,149 46 
6 , 910.971 54 
10 , 045.613 09 
2 , 145,193 21 
82 , 076,706 87 
33 , 163,715 26 
131,253 08 
4,803 331 52 
3 , 542,320 82 
5 , 173,278 83 
197,173 48 


2 


.03 


$ 200 , 502,681 31 


$ 25,000 00 

' 26,384 00 

3,850 66 

2,666 66 
614 83 
1,600 00 

40,012 41 
927 00 
10,223 72 
391 43 

1,500 00 
1,300 00 


.11 

”.20 

”.oi 

”. 2 i 

.02 

.03 

l! 93 
.03 
.07 

.03 

.04 


$ 23 , 194,554 80 
3 , 235,521 31 
13 , 234,437 78 
1 , 272,298 85 
46,163 497 04 
3 , 355,120 25 
946 627 58 
2 794,843 66 
6 , 408,782 78 

33 . 336.417 02 
2 , 074,807 37 
3 , 782,628 72 

14 , 489,646 76 . 
17,995,862 82 .* 
5 , 896,602 08 

10 . 768.417 46 
3 , 573,892 76 
2 , 081,393 63 
2 , 908,382 44 
1 , 290,281 77 
8 , 099,634 34 


$ 113,803 39 
170,195 68 


.05 

.04 


$ 206 , 903,651 22 
407 , 406,332 53 


uimuoun A nc/VPTYrNn. TO A f'.T <YF 


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[ Official Report of the New York Insurance Department .] 


NEW ENGLAND MUTUAL LIFE INSURANCE COM’Y. 

Located in Boston, Mass. 

[Organized December 1, 1843.] 

BENJAMIN F. STEVENS, President. JOSEPH M. G1BBENS, Secretary 

Attorney for Service of Process in this State . 

WILLIAM RATCLIFFE, Jr., New York City. 


I. INCOME DURING 1876. 

Cash received for premiums, without deductions . . . $1,426,363 83 

Premium notes, loans or liens taken iu part payment for premiums. 569,923 01 


Total premium income . 

Interest upon mortgage loans 
Interest on bonds and dividends on stock 
Interest on premium notes, loans or liens 
Interest on other debts due the company 
Rents for use of company’s property 


$1,996,286 84 
152,115 42 
411,900 43 
155,616 09 
38,250 27 
46,649 26 


Total income during the year . 

Balance of net or ledger assets December 31, 1876 


$2,800,818 31 
13,469,390 92 


Total 


$16,270,209 23 


II. DISBURSEMENTS DURING 1876. 


Cash paid lor losses and additions ...... $768,906 19 

Premium notes, loans or liens used in payment of same . . 37,555 81 

Cash paid for matured endo-wments and additions .... 214,213 75 

Premium notes, loans or liens, used in payment of same . * 66,013 25 


Total amount actually paid ........ 

Cash paid for surrender policies ........ 

Premium notes, loans or liens used in purchase of surrendered policies, and voided 
by lapse ........... 

Cash dividends paid to policyholders ....... 

Premium notes, loans or liens used in payment of dividends to policyholders 

Total paid policyholders ..... $2,159,460 87 

Cash paid for commissions to agents ....... 

Cash paid for medical examiners’ fees ....... 

Cash paid for salaries and other compensation of officers and other office employees 
Cash paid for taxes, licenses, fines and fees ...... 

Cash paid for advertising ......... 

Cash paid for the following items, viz.: Printing, stationery and miscellaneous 

6Xp6IlS6S ♦••••• 

Interest and premiums paid on investments ...... 

Total miscellaneous expenses ..... $34S,324 81 


$1,086,689 00 
332,449 90 

270.2S0 45 
332,489 59 
,137,551 93 

94,559 07 
11,215 58 
60.501 13 
17,141 31 
11,810 52 

92.422 51 
60,674 69 


. $2,507,785 68 


$13,762,423 55 


Total disbursements during the year 
Balance December 31,1876 














Invested in the following : 


t>04 4 


III. ASSETS, AS PER LEDGER ACCOUNT. 

Real estate, unincumbered, cost value ....... 

Loans secured by mortgage on real estate, first liens .... 

Loans on stock collaterals 

Loans made in cash to policyholders on the company’s policies 
Premium notes, loans or liens on policies in force, the reserve in excess of all 
indebtedness ........ . 

Stocks, bonds, etc., owned by the company ..... . 

Cash deposited in bank ......... 

Bills receivable for premiums ........ 

Total net or ledger assets as per balance ...... 


OTHER ASSETS. 

Interest accrued on bond and mortgage ....... 

Interest accrued on bonds and stocks 
Interest accrued on collateral loans 

Interest accrued on premium notes, loans or liens ..... 

Rents accrued on company’s property ou lease ...... 

Market value of stocks and bonds over cost ...... 

Gross deferred premiums on policies in force December 31 . . $187,659 53 

Deduct the loading on above gross amount .... 37,530 00 

Net amount of uncollected and deferred premiums . . . . 

Total assets .......... 

Deduct items not admitted ......... 

Total admitted assets ........ 


Items Not Admitted: 


Philadelphia renewals ........ $5,000 00 

Bills receivable . . . . . . . . 2,300 64 

Total items not admitted ...... $7,300 64 


IV. LIABILITIES. 

Net present value of all the outstanding policies in force on the 31st day of Decem¬ 
ber, 1876, computed by the New York Insurance Department, according to the 
American Experience Table of Mortality, with 4 % per cent inteiest 
Claims for death losses unpaid ...... $168,369 00 

Claims for matured endowments unpaid , 16,866 00 

Total policy claims ......... 

Dividends of surplus, or other description of profits due policyholders. 

Amount of any other liability of the company, viz.: Premiums paid in advance. 

Liabilities on policyholders’ account, ...... 

Gross surplus on policyholders’ account, ...... 

Total liabilities, 


$1,361,156 38 
2,401,716 67 
383,221 62 
9,988 50 

1,823,940 53 
7,284,034 88 
182,127 49 
226,237 48 

$13,762,423 55 


53,183 98 
115,971 62 
9,404 20 
55,000 00 
10,223 72 
340,700 SO 


150,129 53 

$14,497,037 40 
7,390 64 

$14,4S9,646 76 


$11,541,773 00 


185,235 00 
137,011 68 
579 11 

$11,864,598 79 
2,625,047 97 

$14,489,646 76 












605 


INDEX. 


Actuary: 

Duties of, . 

Salaries of, see various companies. 

Bartlett, William H. C., Actuary Mutual Life: 
Testimony of, . . 

Number of policies, 

Amount they insure, , 

Policies issued in 1876, 

Amount they insure, . 

Policies surrendered in 1876, 

Surrender value paid therefor, 

Action as to procuring surrenders, 

Amount paid for medical examinations, 

Loans by, and procedure on, 

Dividends and amount allowed on premiums, 
Amount paid for death claims, 

Litigations by, . 

Stocks held by, .... 

Bonds and mortgages held by, 

Fire insurance held as collateral, 

Unpaid losses by, . 

Reinsurance, .... 

Lapsed and forfeited policies, 1876, . 

Amount of insurance thereby, 

Usual per centage to agents, 

Paid-up by policies, . 

Statement of company, 

Superintendent’s examination, 


Page 

14 


8 

8 

9 

9, 10 
9 
9 
9 
9 

10 , 11 
11, 16 
11, 14 
13 

13 

14 

15 

16 
16 
17 

120-27-8 
28 
28 
28 
29, 30 
31, 32 


Beers, William H., Vice-President of the New York Life: 


197 


Why report for 1876 returned, 
Report for 1876, 

Statement as to policies, 
Statement as to real estate. 
Stocks, bonds, etc., 

Election trustees, 

Number of policyholders, 

Proxies, 

No change of trustees, 

Reporting items of cash on hand, 
Forged draft for $64,000, 

No fictitious swelling report, 
Balancing books, 

Connections with other companies, 
Fire policies as collateral, 

Salary of officers, 


197, 209, 210 
199 to 205 
205 
208 
209 

210, 211, 212, 213 
211 
211 
213 

213,272 

215 

215 

215 

215 

216, 295 

217, 219 






606 


Beebs, William H.—(Continued). 

Salary of general agent, 

Boston office, 

Home office, 

Agents’ per centage, 

At St. Louis, 

At Cleveland, 

At Boston, 

Classes of policies, 

Loading, 

Net premium, 

Reserve, 

Surplus, bow made up, 

Policies issued in 1876, 

Paid-up policies in 1876, 

Amount of reserve paid on such, 
Clause for paid-up policies, 

Copy of application sent with policy, 
Policies lapsed in 1876, 

Policies lapsed, dividends, reserves on 
Restored, .... 
Paid-up of those lapsed, 

Amount of lapaed, 

Reserve on such, 

Character of lives of lapsed policies, 
Number expired by death in 1876, 
Payments in such cases, 

Number contested, 

Committees, 

Compromises, 

Amount paid on death policies, 1876, 
Forfeited, paid-up, etc., in 1875, 
Amount of reserve, . . 

Amount of surplus, 

Amount insured. 

Real estate, 

Foreclosures, 

Answers to Mr. Weiant, 

Amount loaned on mortgages, 

Method of loaning, local boards, etc., 
No conditions as to 
Premium notes. 

Stocks and bonds, 

Accrued interest, 

Publication of losses, 

Not of policies lapsed, 

Reinsurance, 

Death losses not due, . 

Contested claims, 

Issues Tontine policies, 

Character of this plan, 

Number of-such, 

Amount of insurance and reserve, 
Amount of Tontine fund, 

Loading, must pay expenses of such, 
Traveling expenses, 

Vouchers taken only for amount paid, 
How payments made, 

How surrender value computed, 

Do not agree to pay surrender value, 
Reinsurance, United States Life, 
Benefit to president of that company, 


233, 248, 


Page 

258 
220 

231, 255, 256 
220, 221 
221 
221 
221 
221 
221-2 3 

222, 223 
. 222, 223 

251 
223 

223, 225 

223 

224 

224 

225 
251 

225 

. 225, 228 
225, 226 
. 225, 226 

226 
227 

227, 228 
227, 267, 268 

227 

228 
228 

228, 231 
231, 235 

231 
231 

. 231, 232 
231-2, 253-4 
232 3 
233 

259, 263, 270, 273 
249, 251 
233 

233 

234 
234 

234 

235 
235 

235, 237 
237 

237-8, 242-3, 277 

237 
237, 243 

242-3 

238 

. 239, 240 
240 

240 
240, 241 

241 

241, 242, 275-7-8 
. 275-7-8 







607 


i, William H.—(Continued). 

Chamber of Life Insurance and object. 

Page 

243-7-8 

Amount paid to it, 

• • 

243: 

Mortality information, .... 

• 

244 

No commission on fire policies, 

• • 

248 

Advertising in 1876, .... 

• 

251-3 

Difficulty with Stephen English, 

• • 

254-5 

Officers not required to give security, 

• 

255 

Aggregate expenses, 1876, 

Lunch to employees, .... 

• • 

255 

• 

257 

No bonuses directly or indirectly, 

• • 

257-8: 

Per centage allowed agents, 

258-9, 

266-7 

Agent named Moore .... 

• r 

259 

Average of deaths, .... 

• 

263-4 

Company never examined by superintendent, 

• r 

274 

Policy of snch examinations, 

• 

27F 

ber of Life Insurance: 

Formation and operation of, 

. 131-2, 

172-4 

See Beers, William H. 

Hyde, Henry B. 



Lewis, Charlton T. 
Lloyd, Isaac 
McCurdy, R. A. 
Nichols, John A. 


Directors: 


See Officers. 

Various Companies, 


English Stephen: 

Litigation with Winston of Mutual Life, 

Character and number thereof, 

Settlement of, 

Aggregate of bail required, 

Bonuses, ...... 

Restoring policies on Winston’s son’s life, 

Treatment while under arrest, 

Suit against Continental Life, 

New Jersey Mutual, .... 

Operations of Continental Life, New Jersey Mutual, 

Bonds abstracted, ..... 

Equitable Life: 

Excuse of. 

Salaries paid by, ..... 

See Fackler, David P. 

Furber, Henry J. 

Hyde, Henry B. 

Western, Theodore 

Fackler, David P., Actuary, ..... 559* 

Tontine policies of Equitable, .... 559-60* 

Refusing to answer as to number of Tontine policies, . 559 

Committee debate on the question, . . . 560-61 

Mr. Husted’s speech—Committee made a secrete or smut machine 561 
Mr. Lang’s reply, , 563- 

Mr. Moak’s remarks, . . - • . 563 

Didn’t ascertain number of Tontine policies issued, . 565 

Number in force, ...... 565 


435 

435 

435 

435, 437, 441 6 

436 

438 
438: 

439 
442 
442 

443-45-6 

444r 


qp> 

34-9, 42-8 


608 


Fackleb, David P.—(Continued). 

Not number forfeited, . 

Nor Tontine periods, .... 
Theory of such policies, . . . . 

Nor amount of reserve on such forfeited, 

Amount surplus on such forfeited, 

Amount surplus on all Tontine, 

Many mature at same time, . . . . 

Reserve on al) policies, 

Not surplus Tontine and non-Tontine, 

Not amount of assets, 

Policy liabilities of company, 

Surplus on Tontine included in general surplus, 

Surplus on Tontine policies belongs to such policyholders, 
Not an asset, . 

Should appear separately, 

How reported, .... 

Not reported as a liability, 

Is one, .... 

Increase in one year, 

Reserve dividend plan, 

Companies which use Tontine plan. 

Surplus Equitable, according to Mass, standard, 
Difference between Massachusetts and New York, 


Page 

565 
565-66 69 
565-66-69 

566 
566 

566 

567 
567 
567 

567 
567-68 

. 568-70 
568 72 

568 
. 568-69 

569, 571, 575 
569-70-71-75 
570, 571 
571-73 
574-75 

575 
575-6 

576 


Excused from answering question as to surplus of Eqnitable, 577 
Paid-up policies, . . . . 577-78, 580-81 

Effect of forfeitures, .... 578 9 


Non-forfeitable policies, 

Surrender values, 

Examinations by State Superintendent, 
How lands to be appraised, 

Opinion on expediency to legislate, 


578 
578-9-80 

579 
579 
581 


Freeman, James M., Secretary Globe Mutual: 

Salaries of officers of the company, 

Nothing from any other company, 

Loans to officers, 

Policies on lives of officers, . 

Stock company, 

Stock capital, .... 

Dividends, .... 
Assets, of what consist, 

Mortgages and method of loan, . 

Foreclosures, .... 

Deferred premiums, 

Commission allowed agents, 

Payments to counsel, 

Loans on policies, 

Pliny Freeman, president, is father, 

No connection with any other company, 

Effects of such connections, 

Managing directors salary, 

Is father-in-law of president, 

Collusion between medical examiner and insured, 
Number of policies close of 1875, 

Amount insured thereby, 

New policies during 1876, . . 

Amount insured thereby, 

Lapsed policies, ' . 

Number restored and amount of insurance, 

How much lapsed policies reserve forfeited, 
Amount of death losses in 1876, 


87 

87, 90, 105-7 

90 

. 90-92 

93, 95 

95 

96 

. 95-6 

96-102 

. 96 98 

98-103 
102 

102, 119 

103, 105 
103 
106 

106-7 

124 

107 

374 

. 107-10-11 

109 
109 
109 
109 

109, 116-17-23 
109 

109, 117 

109, 114 



609 


Freeman, James M.—(Continued). 

Litigation, 

Policies date from delivery, not appplication, 
Amount of surrender values paid, 

How such surrenders made, 

How much insurance such policies represented, 
Paid-up policies, and how much represented, 
Rents paid, 

Amount of reserve, 

Reinsurance, 

Lose money on reinsurance, 

Legislation as to lapsing of policies, 
Controlling collateral fire insurance, . 
Explanation as to former testimony, 

Connection of officers with horse railroad, 
Character of that road, 

Management of it. 

Officers received $10,000 stock as bonus, 
Officers interest in lands along, 

Loan of funds of Globe to it, 

No interest paid, 

Loan to other trustees and officers, 

Connection of officers with other corporations, 
Father-in law of president, managing director, 
Cashier, his son-in-lav, 

Son formerly agent in Europe and income, 
Bonuses to officers, 

Mortgages, . 

Loans, 


Page 

109, 114 
113 
115, 117 
115 
115 

117 

117, 118 

118 

118, 123 
119 

123, 124 
124 5 

367 
367-8 

368 
368 
368 
371 

368, 372 
371 

372-3, 377 

373 

374 
374 

. 374-5 

375-6 

376 

377 


Furber, Henry J., Vice-President Universal, Financial Agent Char¬ 
ter Oak, etc.:..... 446 

Companies connected with and how, . . 446-7 

Universal organized and connection with, . . 447 

Was stock company, .... 447 

Different plans of organization, .... 447 

Connection with reinsuring Guardian, . 448-60-64-76 81 

Though practical insurance man couldn’t discover 

condition, . . . 450-1-2-66-69,470-76 81-2 

Loading, ...... 453 

Rpqpi*VA 

How paid the $650,000, ’ . 

Efforts to procure surrender Guardian policies, 

Extent of such surrenders, 

Amount of reserve paid therefor, 

Insurance liability of Guardian, 

Receiver, Guardian appointed, 

Assets at that time. 

Guardian had swallowed N. Y. State, 

Guardian had swallowed Reserve Mutual, . 

Widows and Orphans swallowed by Reserve Mutual, 

New York State, 

All gone into receiver’s hands, 

Assets of all of them then, 

Assets, when swallowed by Guardian, 

What had become of $2,000,000, 

Liability when reinsured, 

Liability when receiver appointed, 

What had become of policies, 

Amount paid for death losses, 

What had become of others, 

Average of forfeitures, 


453-4 
. 455 6 

459-60-71 

460 

460- 1 

. 461-2 

461 
461 

461-69 
. 461-69 
461,469,522-29-30 
. 461-69 

461 
. 461-2 

461- 2 

462 
462 
462 
462 
462 
462 
462 




610 


Furber, Henry J.—(Continued). 

Effect of reinsurance, 

Per centage paid agents procuring surrender, 

ChaDge of rates of Universal, 

Pays no dividends, .... 
Number policies of Guardian when receiver appointed, 
Amount of insurance, .... 
Amount of reserve in existence, 

When eighty per cent reserve Guardian paid over, . 
Reason why paid before extent liability known, 


Page 

462-3- 

463 

464-5 

465 

466 
466’ 
466’ 
469 
469 


Amount on deposit State department, four companies transferred 469 


Liability found to be incorrect, 

Reserve on liabilities not discovered, 

As they operated per se as paid up, 

To what extent, .... 
Transactions with North America, 

Amount of its assets, 

Character thereof, .... 

North America had swallowed Standard, and bow, 
North America had swallowed Government Security, 
Liabilities of North America, 

What turned over to Pierson, receiver, 

Saiary and receipts in Universal, 

Capitals of Government Security and Standard, 

How North America swallowed Standard, 

How North America swallowed Government Security, 
Insurance by North America, 

Amount of reserve, 

Number of policies in force, 

Arrangement as to North America, 

Morgan, president, 

Sou-in-law, vice-president, 

Son, secretary, 

Another son, actuary, 

$2,000,000 had been usuriously loaned, 

How much paid in, 

Source from which came, 

Amount drawn, 

Bad assets, 

Mrs. Morgan’s contract with company, 

How buying insolvent company profitable, 

Became president North America, 

Connection with Charter Oak, 

Amount paid in out of own funds, 

Transactions as to New York real estate, 

Why not interested in surrender of policies, 

Bought $135,000 of stock, 

Connections with various companies, 

Propriety of, 

Amount of stocks owns in Universal, 

Other stockholders, 

How many directors of Equitable, also of Universal 
To what extent surrender of policies obtained. 

What done with reserve, 

How accounts kept between companies, 

What done with, . . , 

Salary in Universal, 

Salary in North America, 

Salary from Charter Oak, 

Views as te liability on Tontine policies, 

Views as to surrender values, 

Views as to average length of policies, 


470 
470 f 
470, 478 
470 
472 83 
472 

472 
472-83 

474, 483 

473 
473 

481-82 

483 
483 4 

. 483-4 

484 

485 

485 
485-94 
485-94 

485, 494 
485, 494 
485, 494 
476, 494 
485-6 

486 

487- 9-91 

. 488-9-90 1 

488- 9 90 
491, 500 

495 
495, 503 
497 

498, 501, 502-3 

500 

501 
. 502-3 

503 

503 

503 
592 

503-4 

504 
504 
504 

504, 592. 

592 
504, 592: 
582-3-4 
584-5 
586 




611 



Furber, Henry J. —(Continued). Page 

Table on which mortality computed, . . . 588 

No remedy to suggest to prevent failure, . . . 590 

Causes that lead to failure, . . . 590-91 

Views as to requiring deposit of reserve, . . . 592 

If policy operates as paid-up, is liability, . . 592 

So if dividends applied to increase insurance, . . 592 

Never an actuary, .... 593 


Gebmania: 

Official statement, .... 323, 324 


Globe Mutual: 

Excuse of, . . . . .87 

Statement of salaries, .... 88 

Official statement, .... 378-9-80 

See Freeman, James M. 


Hegeman, John R., Vice-President Metropolitan: 
Salaries paid officers, 

Officers, no connection with other companies, 
Capital of company, 

Dividends, .... 
Assets, 

No corporate bonds, 

Mortgages, 

System of loans, 

Demand loans, 

Home office, 

Foreclosures, 

Premium loans, 

Paid-up policies, 

Deferred premiums, 

Per centage allowed agents, 

Lapsed policies, . , 

Crediting premiums on lapsed policies, 
Commutation of commissions. 

Litigated claims, 

Surrender of policies, 

Stockholders, 

Loans to officers, 

Examination by Insurance Department, 

No fictitious items, 

Premium notes, 

Defense of fraud against policy, 

Taxation, 

Reinsurance, .... 


74 

74-5-6 
75, 83-5-6 
76, 86 
76 

76 

77 

77 

77-8, 85 

78 
78 
78 

78 

79 

79 

80 

80 1-2 5 
81 
81 
81 
81 
82 

83 

84 
84 

84-5 

86 

86 

87 


Hilburn, Julius: 

Account of loan from N. Y. Life, and being compelled to take 

$60,000 life insurance, . • • 505-6-7 


Western, Theodore: 


507 


Architect Equitable building, account of erection, expense, etc. 507,514 


39 






61 ^ 

page 

Homans, Shepard, President Provident., etc., Actuary Mutual Life: 505 

Length of time actuary Mutual Life, . . • 515 

Mutual company, ..... 515 

Proxies, how obtained, how used, etc., - . . 515-22 

Propriety of allowing policyholders to vote, . . 517-18 

Direction Mutual Lite once changed by Winston, . . 520 

Probability of policyholder obtaining list of voters, . 520-1 

Number of trustees, Mutual Life, . . . 521 

How elected, ...... 521 

How stock companies controlled, .... 522 

By purchase of stock, ..... 522 

Widows and Orphans how disposed of to Mutual Protection 522-29 30 
McCurdy’s connection with the transfer, . . 522 29 30 

How many of Mutual Life directors also of Widows and Orphans 529 

529-30 

530 

530- 1 

531 

531- 2 

532 
532 

532 
532 3 

533 
533 
533 
533 
533 

533 

538- 39 

534 
584 38 

534 8. 551 

539- 40 
541 44 

541 

541, 549 

542 

542, 549 

543 

544 
549 

550, 552, 588 9 


How stock disposed of, 

How contract made. 

Character of business, 

Capital impaired, 

Reserve upon policies intact, 
Policyholders amply protected, 

Done to save stockholders, 

Stock impaired from too large dividends, 
How dividends declared, 

How happened to be too large, 

On reversionary dividends, 

Not on account of losses, 

Mutual Protection absorbed, 

Reserve Mutual, absorbed by Guardian, 
Guardian by Universal, 

Trouble of Guardian, 

Assets of the four . 

Dividends in Mutual Life, and system of, 
Troubles of witness and Winston, 

Tontine policies, operation and liability, 
Commissions paid to agents, 

Decrease of life insurance companies, 
Amount- of premiums required, 

Loading, . 

Reserve, . 

Per cent of forfeitures, 

Forfeited reserves. 

Surrender values, 

Tables of mortality used, 


Hyde, Henry B., President of Equitable: 

Salary of, ....... 32-9 

Income as agent Mutual Life, .... 39-41 

Compensation to agents, ..... 41 

Salary of vice-president, . . . . . 42-43 

Salary of actuary, ...... 43 

Salary of counsel, ..... 54 

Salary of attorney, ...... 54 

Additional compensation, ..... 43-4 53 

Commutation, constructing engineer, ... 46 

Building, erection of home office, . . 46-8, 60, 403, 410 

Buildings, rent charged for home office, . . . 400 

Buildings, expenses for running, . . . 400 

Buildings, paid for furniture in, ... 402 

Buildings, sinking fund at, .... 403 

Buildings, law library in, .... 403 

Building, Boston office, ..... 48, 398 

Building, expenses and production of, ... 402 







613 


Hyde, Henry B.—(Continued) 

Rent paid for offices in various places. 

Real estate purchased on mortgage foreclosure, 

Value mortgaged pr perty, 

System of loans, * . 

Call loans, . . . . , 

Counsel fees paid, .... 

Insurance by company, 1876, 

Income of compauy, 1876 
Premiu is, new insurance, 1876 
Lapsed policies 

Character of different, classes of policies . 

Tontine policies , 

Tontine policies, no effort to induce change 
Massachusetts law .... 

Capital stock of company 
Dividends to stockholders , 

Directors and how chosen 
How many stockholders can elect 
Assets of compauy and character of 
Losses, 1877 and previous years 
Litigation by . 

How far interest paid on mortgages 
Money in bank .... 

Method of payment by company 
Power of officers to draw entire funds 
Dividends to policyholders 
Tontine policies issued by company 
Loading bv i ompany 
Reserve upon Tontine policies . 

Reserve upon all policies kept together 
System of .... 

Reserve upon them kept, separate . 

Reserve, how kept 

Disposition of forfeited reserve upon them 
Manner of auswering questions 
Loading defined by . . . ' . 

Reserve defined by 
Number of Tontine policies 
Surplus of Tontine policies 
Reserve never assessed to pay dividends . 

Dividends .... 

No information as to amount insured by Tontine policie 
No information as to amount insurance forfeited 
No information as to amount reserve. 

No information as to amount reserve forfeited policies 
Tontine fund, how used .... 

Report of, to superintendent .... 
Annual Report, 1876 .... 

Reserve of all classes reported together 
Surplus, how reported .... 

Surplus upon Tontine fund ascertained 
Can’t say whether preserved 
Tontine policies forfeited in 1876 
Reserve upon, can’t give .... 

Surplus upon, can’t give .... 

Aggregate surplus December 31. 1876 
Mercantile Trust Company . 

Stock owned by Hyde .... 

Capital of, and increase of 
Hyde, director of 

Officers of ..... 


Page 

398-9, 402 
49, 51, 402 
49, 51 
. 51, 70-2 
403 
53 4 

. 55 

55, 63 

56 

56, 60 5 6-8-9 

57 
57 

410 

59 

60,62 
61 
62 
62, 63 
63-4, 403 
64 
64 
64 
67 
67 
67, 68 
69 
381 

381 3-4, 404-5 

381 
381-3-5 

. 382 3-4 

382 
405-6 

381- 2 

382- 3 

383 

383 
384-5 

384 

384 
384-5 

385 
385 
385 

3*5-6 
385 
385 
386-7 
387 
387 
386-7 
387 
387 
387 
387 
387 

387 

388 
388 
388 
388 





614 


Henry B.—(Continued). 



Page 

Business of . 

• 

• 

388 

Equitable owns SI,400,000 of stock 

• 


388 

Hyde votes upon it . 



389 

How stock of, acquired by Equitable 

• 


389 

I) vidends paid by . 



389 

Question as to connection of family with, and result 


389 

Safe Deposit Company 



390 

Amount of its stock owned by Hyde . 



390 

None by Equitable .... 



390 

Business of Safe Deposit Company . 



391 

Rent paid by .... 



391 

Officers of - ... 



391 

Dealings between .... 



391 

Is stockholder of Universal 



391 

As to amount of its stock owned by 



391, 395 

Debate as to answering questions 



342-3-4-5 

Capital of the Universal 



395-6 

Officers of Universal . . 


• 

396 

President Universal, stockholder in Equitable 



396 

Stockholder of both companies 



396 

Is stockholder in fire insurance company 



396 

Extent of collateral policies in 



397 

Auswers as to connection with Furber 

• 


396-7 

Understanding as to fire policies to companies 

in building . 

397 

Number in building 



397 

How fire policies issued 



397 

Received nothing tor loans 



398 

Advertising, 1876 .... 



398 

Agents’compensation 



399 

Amount paid them in 1876 



399 

Amount paid for surrender of policies 



399 

Whose expenses paid .... 



400 

Paid for commuted co - amissions . 



401 

New Policies paid in 1876 



405 

Company, member Chamber Life Insurance 

• 


406 

English’s difficulty .... 


« 

407-8 9 

Business preceding 1876 



400 

Agent in Cincinnati named Hodder 



409 10 

Compensation paid agents . 



410 

Received nothing from erection home office . 



411 

Remarks as to examination 



411 

Policies provide for surrender values . 



411 

Story of “ Pat” and the oats 



412 


Knapp, Joseph F-, President Metropolitan: 
Salary .... 
Rescission of contract for per centage 
No bonus on loans 
llow loans made 

Major <fc Knapp Printing Company 
Securities , . . . 

Stockholders 
Heldisibund Association 


552-555 
553 555 
555 

555 

556 
556 558 

558 

569 


Knickerbocker Life: 

See Nicholes, John A. . . . . 138 







615 


Lewis Charlton, T., Secretary Chamber Life Insurance . . 387 

Acts in transfer of Charter Oak .... 347, 340, 44 5 

Compensation therefor ..... 338-344 

Other insurance business ..... 341 

Obnoxious laws - 341-4, 354-8, 360 

Fnrber agreed not to reinsure . 345-46 

Objections to Universal .... 345-8, 53, 64 

Furber’s connection with Charter Oak . . . 347 

Furber’s connection with Universal .... 347 8 

Companies belonging to Chamber Life Insurance . 348-9 

Formation of ...... 349 

Witness’ connection with ..... 849 

Stephen English’s troubles : .349-50, 60 

Chamber enlarged in 1873 ..... 350 

Character of English’s troubles .... 350 

Compromise and character of . , * 350 41 

Aunual contribution by companies .... 351-52 

Management and operation of ... 352 

Meetings, private *..... 353 4 

Salary of secretary ..... 354 

Massachusetts law ...... 357-63 

Universal reinsured Guardiau .... 359 

Character of transaction ..... 359 

Universal reinsured North America . . . 359 

Character of transaction ..... 359 

Mercantile Loan Association .... 360 


Views as to one person holding office 
tions .... 

Non-forfeiture policies 
Bill introduced by committee 
Action of Chamber of Life Insurance 


in different corpora- 


361 

362 

363 
363 


Lloyd, I -aao, Secretary Mutual Life: 

Officers of company 
Connection with other corpoiations 
Amount paid counsel 
Chamber of Life Insurance 
Duties of auditor 

Proxies . . , . • 

Insurance of officers 
Value of stocks . 

Surplus for dividends 
Per centage allowed agents 

Loading : 

Defined . . . . . 

See Various Witnesses. 

Manhattan Life 

Statement .... 
See Stokes, Henry. 


126 

127 

128 
128, 131 

131-2 

132 

133 

134 

135 

136 

137 


144-5-6 


415 

431 


Manning, W. S.: 

Letter to Hon. J. G. Graham on subject of life insurance . 
“ “ G. W. Weiant, reporting to insurance Dep¬ 
artment ....... 

Letter to Hon. J. G. Graham, urging committee to continue 

the investigation ...... 

Letter to Hon. J. G. Graham, giving name of important 
witness 

Letter to Prof. Elizur Wright .... 

“ and Explanation why Statement of Equitable does 

not appear ...... 


190 

194 

594-95 

596 

597 

598 



Massachusetts Plan : 

Explained 

See Fackler, David P. 


357-8 


McCurdy, Richard A., Vice-President Mutual Life: 

Winston, F. H., forfeited policies of, restored after death . 

Was son of president of company .... 

Testimony on Superintendent Miller’s examination copy¬ 
righted ....... 

Bonuses voted by officers to themselves 
Bonuses charged to dividends .... 

Can’t give amount within half a-million 
Salaries ..... 

Advertising ..... 

Expenses ..... 

Contingent guaranty fund 
Law expenses and names of counsel 
Foreclosures ..... 

Miscellaneous expenses 
Traveling at company’s expense 
General agents .... 

Amount of receipts of 
Merrill is president’s son-in-law 

His yearly income ...... 

Breese and other general agents .... 

Commuted commissions ..... 

Don’t issue Tontine policies .... 

How trustees elected ...... 

Officers all policyholders ..... 

Proxies, character of, how obtained, etc., called Children of 

Israel, because never supposed to be numbered. 298,299, 300-1 
On loans don’t compel to take policy .... 295 

Interest on mortgage loans ..... 300-1 

Assets ........ 301 

Trustees connection with other corporations . 30, 327, 330-1 


278, 303 
278 


279 80-1 
. 281-2-3 

234 
281 

283-4-5 6-7-8. 334 5 
. 287, 295 
287-8 
288 

. 288-91, 334 
. 290, 291 
291 

^ . 292, 293 

283 

293 4, 333 
293. 302 

296 
394 5 
295-6 

297 
297-7 

297 


Loans to trustees 
Both president’s sons in company’s employ and salary 
Former agent for New York, McCurdy’s brother.in law 
His income therefrom 
Present agent 
Restaurant for employees 
Wine dinners to officers . 

Reformed this last year 
Expense of restaurant 
Policies lapsed in 1879 
Loading of premiums . 

New policies issued in 1876 . 

Aggregate of premiums thereon 
Forfeited in 1876 
Surrendered lor values . 

How much paid therefor 
Per centage of reserve paid thereon 
Paid-up policies in 1876 
Reserve thereon . 

Trouble with Stephen English 
Chamber of Life Insurance 
Objects thereof 

Dividends not paid if parties die before payable 
Dividends counted in premium income 
Difficulty with Rhodes and Houston . 

Real estate - 


302, 316-17 

302 

303 

304 
304 
304 
304 
304 
304 

304 

305 
306, 309 

306 
305, 308 

306 

306 

. 306, 307 
309 
309 

310-11-13-15-18 
. 310-11 

311-12 
. 317, 328 
328 
318 
318, 326 



617 


McCurdy, Richard A.— (Continued). 

Value home office and taxes on 

^ alue Boston building 

Value in Philadelphia building . 

Loans at Binghamton and elsewhere 
At Albany 

Amount of loans and whe:e 

Instructions to agents for loans 

Stocks and other assets .... 

No reinsurance .... 

Death losses unpaid # .... 

Amount of reserve .. 

Fire insurance as collateral. 

Nothing received by officers for bonus on loans . 

How losses paid. 

Bonds of officers to company , . 

Contested claims. 

Tontine fund ......... 

Reserve on southern policies. 

Payments to Hyde, President of Equitable . 
Connection with Widows and Orphans Co. 

See testimony of Homans, Shepard. 


Page 

319 
219 
319 
320, 327 
325 

325 
336, 337 

326 

327 
327 

327 
327 8 

328 

329 
329 

331 2 
332-2 

335 

336 
522, 530 


Metropolitan Life: 

Excuse of. 72 

Salaries. 73 

See Hegeman, John R. 

Knapp, Joseph F. 


Morris, Franklin, President New York Life 
Salary of officers company . 

Bonus . 

Connection with other companies 
Payments to attorneys . . . . 

Policies at commencement 1876 . 

Amount insured. 

Number issued 1876 and amount insured 
Number lapsed in 1875 "... 
Amount death losses .... 

Cases contested. 

Lapsed by non-payment 

Arpount insured thereby.... 

Number restored ..... 

Paid-up policies. 

Amount insured thereby 
Amount allowed thereon 
Efforts to procure surrenders 
Premium notes. . . . , . 

Assets and of what composed 

Stocks and bonds. 

Real estate ...... 

Home office. 

Foreclosures. 

Method of loaning. 

Fire policies as collateral 

Character of loans. 

Reinsurance. 

Never borrowed stocks, etc. . . 

Never examined by superintendent 
Salaries for prior years .... 
Value of forfeited policies in 1876 
Reserve value forfeited policies 


175 
175-6 
177 
177 
178, 189 
179 
179 
179 

179 

180 
180 
180 
180 
180 
180 

180-81 

181 

181, 186 
181 
181-2 
182, 186 
183 
183 

183 

184 
184 

184 

185 

186 
186 

187 

188 
188 

















618 


) 


Morris, Franklin.— (Continued). • Page 

Whole number policies issued ...... 188 

Directors, how elected . . . ... . . 188-89 

Proxies,and how obtained ....... 189 

Chamber of Life Insurance and object . *' . . . 189 


Mutual Life : 

Excuse of.. 

Statement by .......... 

Salaries by 

Statement ....... ... 

Examination by superintendent ...... 

See Bartlett, William H. C. 

English, Stephen. 

Homans, Shepard. 

Lloyd, Isaac. 

McCurdy, Richard A. 

• 

Winston, F. S. : 

Testimony taken in 1865, as to salary and obtaining position 
president ....... 

New York Life: 

Amount of Salaries paid by .... 175, 176 

Officialstatement .... 199, 200 1-2-3, 204-5-6-7 
See Beers William H. 

Franklin Morris. 

Hilburn, Julius. 


1 

5 

7 

29, 30 
31, 32 


600-1-2 


Nichols, John A., President Knickerbocker : 

Salary of officers , 

Litigation .. . , . 

Examination by Insurance Department 
Reserve defined . 

Loading defined . . 

Stock company .... 
Dividends to stockholders 
Massachusetts plan .... 
Paid-up policies .... 

Limited plan .... 

Reserve of forfeited policies 
Dividends to policyholders . 

Dividends not called for 
Surrender values .... 
Election of directors .... 
Voting by policyholders 

Proxies ...... 

Policies on lives of officers . 

Loans ...*.. 
Agents, and usual commission 
. Assets ...... 

Home office ..... 

Foreclosures ..... 

Loans ..... 

Collateral fire insurances 

No use of corporate funds for outside purposes 
Balances not swollen at end of year 
Never loaned to or borrowed of other companies 
Call loans ..... 

Money drawn on checks of two officers 
Security by officers .... 


51-2-3, 


258 

141 

144 

144-5 6, 150 
145 6 
146 
146 
146-7 
147, 151, 152 
147, 148 
154. 170, 171 
151, 170-1 
. 151, 152 
153 4 
155-6 


156 
156-7 
157, 158-9 

159 
159, 160 

160 
161 

161-3 
163 4 
164 9, 170 
167 

167 

168 
168 
168 
168 


t 








Nichols, John A. — (Continued). Page 

Officers and directors i o connection with other companies 169, 170 
Policy of, allowing lo be . • . . . 170 

Law forbidding lapse of policies, views of . . 170 

Advertising ........ 171-2 

Chamber of Life Insurance .... 172, 174 

Officers : 

Acting f ~>r different companies ..... 27,43 

See Various Witnesses. 


Proxies : 

Voting on, and how obtained . 
See Various Witnesses. 

Reinsurance : 

See Various Witnesses. 


Reserve: • 

Defined ....... 144, 146, 150 

Of forfeited policies .... 150, 383, 384 

Salaries : 

See Various Companies and Witnesses. 


Stokes, Henry, President Manhattan 
Loading of premium 
Reserve ..... 
Excess over loading and reserve 
Dividends .... 

Investments .... 
Bonds and mortgages 
Owns no home office 
Rent of office .... 
Per centage to agents 
Surplus 

Dividends to policyholders . 

Capital of company 

By whom held 

Vote by policyholders 

Dividends to stockholders 

Bonus to employees 

Salaries .... 

Proxies . 

Cases litigated 

Foreclosures and purchases of real estate 
Loaus .... 

Not member Chamber Life Insurance 


415 

. 415 6 8-22 3 
415-7-23-24 

418- 19 

. 418-19 

415-16 

416 
416 
416 

416, 430 

419- 20 
418-19-20-23 

421 

4-99 

420-21-26 
. 421-23-24 

422-25, 426-27 
425 

. 426-29 

427-30 

428 

429 

430 


Tontine Policies: 

System of ....•* 

Forfeited reserves, etc., a liability, (Beers) 

(Fackler) 

(Homans) 

(Furber thinks not) 

Issued by Equitable. See Hyde. H. B. 

Issued by N. Y. Life. See Beers, W. H. 

See Beers, Wm. H. 

Fackler, David P. 

Furber, Henry J. 

Homans, Shepard. 

Hyde, Henry B. 


381, 539, 540, .565-6 
242, 243, 247-8 
. 567-71 

539 40 
582 






Universal Life : 

See Furber, Henry J. 

Lewis, Charlton T. 

Wright, Elizur, letter to W. S. Manning 
Witnesses : 

Mr. Moak’s remarks as to 
See Various Names. 

Washington Life : 

Examination and statement 

Companies of other States : 

Mutual Benefit—Statement and examination . 
New England Mutual 


598 

563 

. 32i, 322 

6GU, 6042 
604 3 , 6044 





















